Cardozo, Adriana R. Diaz Pavez, Luis R. Martínez-Zarzoso, Inmaculada Nowak-Lehmann D., Felicitas
Year of Publication:
IAI Discussion Papers No. 252
Georg-August-Universität Göttingen, Ibero-America Institute for Economic Research (IAI), Göttingen
Workers' remittances sent to Latin America declined sharply as the COVID-19 pandemic spread in the first half of 2020, rebounding in the second half. This paper uses a gravity model to estimate the impact of containment and economic support measures, as well as travel restrictions, on remittances sent to Latin America. The results indicate that containment measures and restrictions in internal and international movement in receiving countries are the factors mainly explaining the fall in remittance flows. Moreover, the business cycle in sending countries and the real exchange rate in receiving ones help explain the subsequent recovery of remittances.