Remittance flows and informal economies in post-Soviet transition countries

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Kakhkharov, Jakhongir
Rohde, Nicholas
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2022
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Abstract

This paper studies the impact of remittance flows on the size of informal economies in post-Soviet countries. We compile a unique data set from a cluster of transition economies and use panel data econometric models to estimate effect sizes. Identification comes from varying macroeconomic conditions in Russia, which are plausibly exogenous to currency demand in remittance–recipient countries. Our estimates indicate that, across our models, it seems plausible that around 25% of all remittances flow into the informal economies of the region. Since shadow economies facilitate numerous illegal activities (such as organised crime, informal money lenders and money laundering), stronger regulatory and institutional frameworks accompanied with provision of incentives for informal firms to be integrated in the formal economy are likely to curb undesirable economic behaviour.

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The World Economy

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This is the peer reviewed version of the following article: Kakhkharov, J; Rohde, N, Remittance flows and informal economies in post-Soviet transition countries, The World Economy, 2022, which has been published in final form at https://doi.org/10.1111/twec.13375. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.

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Political economy and social change

Applied economics

Social Sciences

Business, Finance

Economics

International Relations

Business & Economics

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Kakhkharov, J; Rohde, N, Remittance flows and informal economies in post-Soviet transition countries, The World Economy, 2022

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