|We use a dynamic system GMM regression on ve rounds of panel data to estimate the
impact of international remittances on consumption of urban Ethiopian households, who spend
more than 70% of their consumption budget on food. Results suggest that international re-
mittances play a signi cant role in augmenting household consumption. A 1% increase in
remittances from abroad leads to a 0.10% increase in household consumption. Taking advan-
tage of the detailed nature of the panel data, we also show that households that experienced
idiosyncratic shocks are likely to send a member abroad and receive international remittances.
The paper sheds light on the magnitude of the impact of international remittances and the char-
acteristics of the socio-economic groups who take advantage of a rapidly changing economic
environment, such as access to international migration.
|EfD Discussion Paper Series
|Remittances, Shocks, Household Consumption.
|Shocks, Remittances and Household Consumption A Dynamic System GMM Analysis
|University of Gothenburg