World Bank research sees value in ‘acyclical’ remittances

Research published today by the World Bank underscores the benefits of flows of remittances in helping people smooth their consumption, particularly through times of crisis.

The article, published as part of the World Bank's Global Economic Prospects report, says remittance flows are "relatively stable, and acyclical". The research team, led by Ayhan Kose and Dilip Ratha, find remittance flows remain steady, in the majority of countries, regardless of the domestic business cycle.

This, they say, offers the potential for significant benefits. "Countries with large remittance receipts tend to display less correlation between output and consumption growth over the business cycle," they write. "Such consumption behaviour often enhances welfare."

Governments would do well to heed this information, the authors say, and could do more to encourage inward remittance flows. Policy options include lowering the cost of sending remittances, avoiding taxes on the flows, and "doing away with" multiple exchange rate regimes.