Relationship between remittances and macroeconomic variables in times of political and social upheaval : evidence from Tunisia's Arab spring

Abstract EN

If Tunisia was hailed as a success story with its high rankings in economic, educational, and other indicators compared to other Arab countries, then the 2011 popular uprisings demonstrate the need not only for political reforms, but also for major economic reforms.

The Arab Spring underscores the fragility of its main economic pillars, including tourism and Foreign Direct Investment.

In such turbulent times, this paper examines the economic impact of migrant remittances expected to have a countercyclical behavior.

Our results reveal that, prior to the Arab Spring, the impacts of remittances on growth and consumption seem negative and positive respectively, while their influence on local investment varies.

These three relationships held in the short term.

By considering the period surrounding the 2011 uprisings, the investment effect of remittances becomes negative and weak in the short and medium terms, but becomes positive and strong on growth and consumption in the long term.