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Studies on remittances concentrating on the microeconomic implications have broadly reached a consensus that remittances have a welfare-enhancing effect. They lift people out of poverty, have a direct beneficial impact on the health and education of migrant families and increase consumption. However, other studies have shown that high remittances can lead to a trap at the macroeconomic level as collectively, they fail to contribute to the longer-term growth of a country. The paper presented in this seminar revisits this debate on the remittance and growth nexus, examining whether there is a ‘remittance trap’ or ‘threshold’ above which remittances start to have a negative effect on growth. Using different empirical approaches based on a large panel dataset of 70 countries between 1970-2018, the study finds that at high levels of remittances appear to be associated with less growth.
Sudyumna Dahal is a PhD candidate in economics at the Centre of Applied Macroeconomic Analysis (CAMA) in Crawford School of Public Policy. Previously, he worked at the World Bank in Washington DC, Africa and South Asia in delivering analytical works, technical assistance, and lending programs. His research interests are at the intersection of macroeconomics, growth and development with a focus on the public policy of developing economies. Sudyumna holds an MA in international economics from SAIS - Johns Hopkins University as a Fulbright scholar.
The CAMA Macroeconomics Brown Bag Seminars offer CAMA speakers, in particular PhD students, an opportunity to present their work in progress in front of their peers, and reputable visitors to showcase their work.