|Conference Explores Remittances' Economic Effects
Remittances sent from immigrants in the United States to their native countries are a recent economic phenomenon. As a result, little study of their macroeconomic effects has been undertaken.
The Atlanta Fed's Americas Center held a conference, "Remittances and the Macroeconomy," in Atlanta in February that convened researchers interested in those effects and in expanding this area of research.
Remittances' wider economic effects bear scrutiny
Remittances reduce poverty
Remittances make up a large portion of the economy of El Salvador, for example, and that nation has experienced high inflation, Mandelman pointed out. Inflation and overappreciation of the currency create problems for manufacturers and farmers because their prices are higher, he explained.
On the other hand, studies show that remittances help nations in many ways, including helping to reduce poverty, improving income distribution, providing financing for microentrepreneurs, and enhancing human capital by, for example, letting children spend more time in school instead of working.
Collaborative research a benefit of conference
The conference featured papers and remarks by economists from numerous universities and institutions, including the International Monetary Fund, the Bank of Spain, the World Bank, the Federal Reserve Banks of Atlanta and Chicago, the Federal Reserve Board of Governors, the Massachusetts Institute of Technology, the University of Michigan, the University of Notre Dame, and Georgia Tech.
Federal Reserve adds convenience to remittances
The service is part of the suite of FedACH International Services, which helps U.S. banks offer a secure and less expensive means of transferring money to their customers. That effort began as part of a 2001 agreement—the Partnership for Prosperity—signed by President Bush and then Mexican President Vicente Fox.
Fox's successor, Felipe Calderón Hinojosa, officially endorsed Directo a México in 2007 as the best tool to reduce the cost of money transfers to Mexico.
March 24, 2008