Remittances and public debt in the CEMAC zone

Abstract

This article analyzes the effect of remittances on public debt in the CEMAC zone. By applying the instrumental variables method and the quantile regression (QR) approach introduced by Koenker and Bassett (1978) over the 2000-2020 period, two major results are found. First, remittances have a negative and statistically significant effect on public debt in the CEMAC zone. Secondly, with regard to the quantile regression approach, remittances reduce the debt only for large debt distributions. Furthermore, the results show that an increase in remittances significantly reduces external debt. Efforts to measure remittances suffer from significant limitations as official estimates underestimate real flows. Necessary efforts should be made by CEMAC countries to increase remittances in order to reduce their public debts.

Keywords: Remittances, Public debt, Quantile regression and CAEMC

JEL Classification: F24, E6, C14

Paper type: Empirical research