infonet-economy

This paper examines how attractive investment opportunities available to temporary migrants at home affect their saving behaviour and the optimal duration of stay abroad. The model predicts an inverse U-shaped relationship between migration duration and the expected rate of return on repatriated savings. A higher rate provides an incentive to go back earlier and consume less abroad, while it can also trigger emigration aimed at generating the savings required for investment after return. The paper illustrates how the behaviour of temporary migrants reflects the interaction between their preferences and the opportunities available in labour and capital markets of both countries.

It is not unusual for immigrants to leave the host country and resettle permanently in their country of origin. This paper examines the interaction among some of the key factors that influence the return decision of immigrant households. These include purely economic variables such as wages of the two countries and the costs and benefits of accumulating country-specific human capital, but also subjective factors such as the intensity of the locational preferences of immigrant parents and children and of their desire to remain together in a single location. The analysis is conducted under alternative assumptions with respect to the role of parents and children in the household's decision-making process.

This paper analyzes empirically the role of financial market imperfections in the way countries’ exports react to a currency depreciation. Using quarterly data for 27 developed and developing countries over the period 1990–2005, we find that the impact of a depreciation on exports will be less positive—or even negative—for a country if: (i) firms borrow in foreign currency; (ii) they are credit constrained; (iii) they are specialized in industries that require more external capital; (iv) the magnitude of depreciation or devaluation is large. This last result emphasizes the existence of a nonlinear relationship between an exchange rate depreciation and the reaction of a country's exports when financial imperfections are observed. This offers a new explanation for the consequences of recent currency crises in middle-income countries.