The ambiguous role of remittances in West African countries facing climate variability

We investigate the consequences of remittances inflows on macroeconomic performance of West African countries over the 1985 - 2007 period. We take into account the exposition of those countries to climate variability by estimating a PCHVAR model which allows heterogeneity between countries’ responses to rainfall shocks. Our results show that the impact of remittances on macroeconomic performances is highly sensitive to those shocks. In particular, when drought conditions prevail, remittances do not longer exert any short-term spillover effects on growth and may increase a situation of economic dependence, by spurring agricultural imports.