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Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov

the dynamics of U.S. states real wages, as well as more temporary factors like U.S. unemployment relief (including the extraordinary pandemic support), U.S. states mobility, and COVID-19 infections at home. The paper also analyses what role the change in the modes of transmission of remittances, additional U.S. fiscal stimulus and U.S. labor market developments, especially in the sectors were CAPDR and Mexican migrants preponderantly work, play in explaining aggregate remittances growth. JEL Classification Numbers: F22, F24, O54 Keywords

Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov
Traditional models relying on standard variables like the U.S. Hispanic unemployment rate fared well in explaining remittances to CAPDR and Mexico during the pre-pandemic period. However, they fail to predict the sustained growth in remittances since June 2020, including the significant increase in the average amount remitted. Using data from over 300 remittances corridors (from 23 U.S. states to 14 Salvadoran departments), we find that this increase is primarily explained by the dynamics of U.S. states real wages, as well as more temporary factors like U.S. unemployment relief (including the extraordinary pandemic support), U.S. states mobility, and COVID-19 infections at home. The paper also analyses what role the change in the modes of transmission of remittances, additional U.S. fiscal stimulus and U.S. labor market developments, especially in the sectors were CAPDR and Mexican migrants preponderantly work, play in explaining aggregate remittances growth.
Aleksandra Babii, Ms. Alina Carare, Dmitry Vasilyev, and Mr. Yorbol Yakhshilikov

Traditional models relying on standard variables like the U.S. Hispanic unemployment rate fared well in explaining remittances to CAPDR and Mexico during the pre-pandemic period. However, they fail to predict the sustained growth in remittances since June 2020, including the significant increase in the average amount remitted. Using data from over 300 remittances corridors (from 23 U.S. states to 14 Salvadoran departments), we find that this increase is primarily explained by the dynamics of U.S. states real wages, as well as more temporary factors like U.S. unemployment relief (including the extraordinary pandemic support), U.S. states mobility, and COVID-19 infections at home. The paper also analyses what role the change in the modes of transmission of remittances, additional U.S. fiscal stimulus and U.S. labor market developments, especially in the sectors were CAPDR and Mexican migrants preponderantly work, play in explaining aggregate remittances growth.

Mr. Tigran Poghosyan

.5330 18.6136 3 months 0.0012 0.0100 0.0596 -3.3337 18.0216 6 months 0.0001 0.0075 0.0499 -3.5513 18.4195 U.S. consumption growth rates 0.4103 0.4348 0.4078 -0.7120 1.9990 U.S. inflation 0.2037 0.1918 0.3100 -1.7666 12.1770 Oil price changes 0.8418 1.5741 11.0766 -0.5489 1.2293 The dynamics of U.S. macroeconomic variables and oil prices presented in Figures 3 - 5 suggests that they exhibit quite volatile behavior. In particular, oil prices have been growing rapidly during

Mr. Jinzhu Chen, Mr. Bharat Trehan, Mr. Prakash Kannan, and Mr. Prakash Loungani

Change Contributed to a Jobless Recovery? ” Federal Reserve Bank of New York , Current Issues in Economics and Finance , Vol. 9 , Number 8 Hall , Robert E. 1995 . “ Lost Jobs .” Brookings Papers on Economic Activity No. 1 , pp. 221 – 256 . Hall , Robert E. 1993 . “ Macro Theory and the Recession of 1990–1991. ” American Economic Review Papers and Proceedings , pp. 275 – 279 . Haltiwanger , John , 2010 . “ The Changing Cyclical Dynamics of U.S. Labor Markets .” IMF , 2010 , Unemployment Dynamics During Recessions and

Mr. Vadim Khramov

) ; 2. the post-1978 period (1978:III to 1997:IV)—the Volcker disinflation period (commonly excluded from estimates); 3. the post-1982 period (1982:IV to 1997:IV)—the period of active monetary policy analyzed in Lubik and Schorfheide (2004) ; 4. the post-1982 period (1982:IV to 2008:I)—the period of active monetary policy, before the financial crisis, included in this paper. Figure 1. Dynamics of U.S. output, inflation, nominal interest rate, consumption, and capital (in log deviations from the Hodrick-Prescott filtered trend), 1960:I -2008:I. Table

Mr. Gian M Milesi-Ferretti and Mr. Philip R. Lane

, and Linda Tesar , 1996 , “ U.S. Equity Investment in Foreign Markets: Portfolio Rebalancing or Return Chasing? ” American Economic Review , Vol. 86 , pp. 77 - 81 . Cline , William , 2005 , The United States As a Debtor Nation: Risks and Policy Reform ( unpublished ; Washington : Institute for International Economics ). Corsetti , Giancarlo , and Panagiotis Konstantinou , 2005 , “ Current Account Theory and the Dynamics of U.S. Net Foreign Liabilities ” ( unpublished ; Budapest : European University Institute ). Edwards

Mr. Gian M Milesi-Ferretti and Mr. Philip R. Lane
This paper highlights the increased dispersion in net external positions in recent years, particularly among industrial countries. It provides a simple accounting framework that disentangles the factors driving the accumulation of external assets and liabilities (such as trade imbalances, investment income flows, and capital gains) for major external creditors and debtors. It also examines the factors driving the foreign asset portfolio of international investors, with a special focus on the weight of U.S. liabilities in the rest of the world's stock of external assets. Finally, it relates the empirical evidence to the current debate about the roles of portfolio balance effects and exchange rate adjustment in shaping the external adjustment process.
Mr. Tigran Poghosyan
This paper analyzes macroeconomic determinants of the foreign exchange risk premium in two Gulf Cooperation Council (GCC) countries that peg their currencies to the U.S. dollar: Saudi Arabia and the United Arab Emirates. The analysis is based on the stochastic discount factor methodology, which imposes a no arbitrage condition on the relationship between the foreign exchange risk premium and its macroeconomic determinants. Estimation results suggest that U.S. inflation and consumption growth are important factors driving the risk premium, which is in line with the standard C-CAPM model. In addition, growth in international oil prices influences the risk premium, reflecting the important role played by the hydrocarbon sector in GCC economies. The methodology employed in this paper can be used for forecasting the risk premium on a monthly basis, which has important practical implications for policymakers interested in the timely monitoring of risks in the GCC.
Mr. Jinzhu Chen, Mr. Bharat Trehan, Mr. Prakash Kannan, and Mr. Prakash Loungani
We provide cross-country evidence on the relative importance of cyclical and structural factors in explaining unemployment, including the sharp rise in U.S. long-term unemployment during the Great Recession of 2007-09. About 75% of the forecast error variance of unemployment is accounted for by cyclical factors-real GDP changes (?Okun‘s Law?), monetary and fiscal policies, and the uncertainty effects emphasized by Bloom (2009). Structural factors, which we measure using the dispersion of industry-level stock returns, account for the remaining 25 percent. For U.S. long-term unemployment the split between cyclical and structural factors is closer to 60-40, including during the Great Recession.