01882cas a2200265 a 4500 AALejournalIMF004019 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451863215 1018-5941 BD-DhAAL BD-DhAAL Gapen, Michael. Beware of Emigrants Bearing Gifts : Optimal Fiscal and Monetary Policy in the Presence of Remittances / Michael Gapen, Thomas Cosimano, Ralph Chami. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (51 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper uses a stochastic dynamic general equilibrium model to investigate the influence of countercyclical remittances on the conduct of fiscal and monetary policy and trace their effects on real and nominal variables in a business cycle setting. We show that remittances raise disposable income and consumption, and insure against income shocks, thereby raising household welfare. However, remittances increase the correlation between labor and output, thereby producing a more volatile business cycle and increasing output and labor market risk. Optimal monetary policy in the presence of remittances deviates from the Friedman rule, highlighting the need for independent government policy instruments. Mode of access: Internet Chami, Ralph. Cosimano, Thomas. IMF Working Papers; Working Paper ; No. 2006/061 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/061/001.2006.issue-061-en.xml IMF e-Library