Edwin Le Heron
The paper aims at showing that one of the main channels by which the US 2007 financial crisis became a real and global economic crisis is the ›confidence channel‹, i.e. that the financial crisis affected firms, banks and households' expectations and confidence, thus leading to what they were fearing. And I propose to model expectations and the state of confidence of private agents to use the indexes calculated by national statistical services from monthly polls.
Edwin Le Heron and Nicolas Yol
Migrants' remittances are an essential source of income in many developing countries. In this article, we build a post-Keynesian stock–flow consistent model adapted to Moldova, one of the top recipients of remittances. In addition to increasing household consumption, migrants' transfers have strong effects on economic growth in Moldova. However, remittances are very sensitive to the economic conditions in migrants' destination countries, especially since the 2008 global financial crisis. After including remittances in consumption behavior and lenders' risk, we run simulations to show how shocks in migrants' destination countries (that is, Europe and Russia) impact the Moldovan economy through fluctuations in remittances. First, the increasing instability of remittances explains a significant portion of the economic volatility experienced by Moldova. Second, the high level of imports implies a weak multiplier effect of remittances, leading to an unsustainable pattern of growth.