Measuring the macroeconomic impact of workers’ remittances in a data-rich environment

Abstract

This article uses 85 monthly time series from Mexico to study the macroeconomic impact of workers’ remittances. The estimation approach is based on the two-step factor augmented vector autoregression methodology used by Bernanke et al . (2005). The results show that Mexico's inward remittances have a positive impact on prices, the stock market, interest rates and various measures of economic activity.

Acknowledgements

Thanks to Susan Pozo, Isabel Ruiz and Mark Wheeler for helpful comments. All remaining errors are ours.