Do remittances dampen the effect of natural disasters on output growth volatility in developing countries?

Jean-Louis Combes (1) , Christian Hubert Ebeke (1)

1 CERDI - Centre d'Études et de Recherches sur le Développement International

This article examines whether or not remittance inflows help mitigate the effects of natural disasters on the volatility of the real output per capita growth rate. Using a large sample of developing countries and mobilizing a dynamic panel data framework, it uncovers a diminishing macroeconomic destabilizing consequence of natural disasters as remittance inflows rise. It appears that the effect of natural disasters disappears for a remittance ratio above 8% of the Gross Domestic Product (GDP). However, remittances aggravate the destabilizing effects of natural disasters when they exceed 17% of the GDP. Finally, the article shows that current and lagged remittance inflows significantly reduce the number of people killed by natural disasters and the number of people affected, respectively.

Keywords: Natural disasters; output growth volatility; Remittances

Domains: Economics and Finance

Jean-Louis Combes, Christian Hubert Ebeke. Do remittances dampen the effect of natural disasters on output growth volatility in developing countries?. Applied Economics, 2013, 45 (16), pp.2241-2254. ⟨halshs-00913613⟩