Longitudinal evidence on financial expectations in Albania

Do remittances matter?

Authors


  • The authors are indebted to José de Sousa, Frédéric Docquier, Yao Lu, Andreea Mitrut, El Mouhoub Mouhoud, Henry Ohlsson, Claudia Senik, Sy Spilerman, Fabien Tripier and one anonymous referee for their very helpful comments and numerous suggestions on a previous draft. The authors have also benefited from the comments of participants at the 25ème Journée de Microéconomie Appliquée (La Réunion), the GRD Economie du Développement et de la Transition (CERDI, Clermont-Ferrand), the LEMNA seminar (Nantes), the DIAL seminar (Paris), the Center for the Study of Wealth and Inequality seminar at Columbia University and the seminar in Public Economics at Uppsala University. Any remaining errors are those of the authors.

Abstract

This article focuses on the effect of remittances on financial expectations in Albania using longitudinal data covering the period 2002–2004. To study the dynamics of income satisfaction at the household level, we use subjective data on past, current and future financial situations and estimate random and fixed effect ordered Probit models. We find that households are more optimistic about the future when they have experienced an improvement in their financial situation in the past and when they have received private transfers from foreign countries.

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