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We estimate a vector error correction (VEC) model for Sri Lanka to determine the response of remittance receipts to macroeconomic shocks. This is the first attempt of its kind in the literature. We find that remittance receipts are procyclical and decline when the island's currency weakens, undermining their usefulness as shock absorber. On the other hand, remittances increase in response to oil price shocks, reflecting the fact that most overseas. Sri Lankan are employed in the Gulf states. The procyclicality of remittances calls into question the notion that remittances are largely motivated by altruism.

Exports and Imports --- Foreign Exchange --- Macroeconomics --- Remittances --- Geographic Labor Mobility --- Immigrant Workers --- Macroeconomic Analyses of Economic Development --- Development Planning and Policy: Trade Policy --- Factor Movement --- Foreign Exchange Policy --- Time-Series Models --- Dynamic Quantile Regressions --- Dynamic Treatment Effect Models --- Diffusion Processes --- Energy: Demand and Supply --- Prices --- International economics --- Currency --- Foreign exchange --- Outward remittances --- Oil prices --- Inward remittances --- Exchange rates --- Balance of payments --- International finance --- Emigrant remittances --- Migrant remittances --- Sri Lanka --- Financial crises --- Economic aspects. --- Mathematical models.

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This paper provides an early assessment of the dynamics and drivers of remittances during the COVID-19 pandemic, using a newly compiled monthly remittance dataset for a sample of 52 countries, of which 16 countries with bilateral remittance data. The paper documents a strong resilience in remittance flows, notwithstanding an unprecedent global recession triggered by the pandemic. Using the local projection approach to estimate the impulse response functions of remittance flows during Jan 2020-Dec 2020, the paper provides evidence that: (i) remittances responded positively to COVID-19 infection rates in migrant home countries, underscoring its role as an important automatic stabilizer; (ii) stricter containment measures have the unintended consequence of dampening remittances; and (iii) a shift from informal to formal remittance channels due to travel restrictions appears to have also played a role in the surge in formal remittances. Lastly, the size of the fiscal stimulus in host countries is positively associated with remittances as the fiscal response cushions the economic impact of the pandemic.

Bhutan --- Macroeconomics --- Economics: General --- Exports and Imports --- Diseases: Contagious --- Emigration and Immigration --- Remittances --- Health: General --- Macroeconomic Analyses of Economic Development --- Health Behavior --- Fiscal Policy --- International Migration --- Economic & financial crises & disasters --- Economics of specific sectors --- International economics --- Infectious & contagious diseases --- Migration, immigration & emigration --- Balance of payments --- COVID-19 --- Health --- Fiscal stimulus --- Fiscal policy --- Migration --- Population and demographics --- Inward remittances --- Currency crises --- Informal sector --- Economics --- International finance --- Communicable diseases --- Emigration and immigration --- Migrant remittances