Tehran Institute for Advanced Studies (TeIAS)

/ Smooth Operator: Remittances and Fiscal Shocks __ Seyed Reza Yousefi


Smooth Operator: Remittances and Fiscal Shocks

December 31, 2017


Khatam University, Building No2.
Address: Mollasadra Blvd., North Shirazi St., East Daneshvar St., No.17. See location on Google map


Dr. Seyed Reza Yousefi

Economist at the Fiscal Affair Department of the International Monetary Fund (IMF)


With 250 million migrants globally, remittances are one of the major sources of income in many developing countries. While there is abundant evidence that remittances facilitate consumption smoothing in receving countries, the literature has not considered whether this effect varies with the fiscal stance and during fiscal shocks. Therefore, we investigate the impact of remittances on the stability of household consumption, using both cross-country and household-level datasets. Our focus is on whether the consumption-smoothing effect changes with fiscal policy phases and whether remittances and government support are substitutes or complements in stabilizing household consumption. We find that remittances help smooth consumption, and hence improve welfare, more during fiscal consolidation episodes, while this impact is insignificant during fiscal expansions. The results also indicate that the effect is more pronounced in countries with greater reliance on remittances.



Seyed Reza Yousefi is an Economist at the Fiscal Affair Department of the International Monetary Fund (IMF). He received PhD in Economics from the University of Texas at Austin, and holds B.S. in Electrical Engineering from Sharif University of Technology. Mr. Yousefi is currently working on issues pertaining to public sector balance sheet, fiscal policy, and remittances, and serves as fiscal economist for Malawi. Prior to joining the Fund, he worked as Economist at the World Bank’s Development Prospects Group and taught as guest lecturer at the University of Maryland, College Park. His publications and research interests span fiscal policy, remittances, growth, financial development and financial inclusion