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1. The political economy of Bitcoin as legal tender in El Salvador: Temporary bandages to permanent wounds?

Author:
Tobias Boos and Juan Grigera
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper provides a contextual analysis of the adoption of Bitcoin as legal tender in El Salvador. First, we outline the historical context and the political situation of the period 2019–24 that serve as context for the passage and implementation of the Bitcoin law (Decree No. 57). We identify the institutional and political context and the main areas of contention. Next, we delve into the macroeconomic context of El Salvador, outlining the fundamental features of its economy and highlighting how they relate to currency issues. Our analysis reveals that the adoption of Bitcoin cannot be understood without factoring in the mounting strains surrounding dollarization, remittances, and foreign debt. We conclude by putting forth a set of hypotheses regarding the potential dynamics and future of Bitcoin as legal tender in El Salvador that point beyond Bukele’s tactics.
Topic:
Debt, Political Economy, Economy, Bitcoin, Digital Currency, Remittances, Dollarization, and Nayib Bukele
Political Geography:
Central America and El Salvador

2. The Static and Dynamic Benefits of Migration and Remittances in Nicaragua

Author:
Lykke E. Andersen and Bent Jesper Christensen
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
This paper utilizes a unique three-wave panel of household data from Nicaragua, which allows a thorough exploration of the relationships between migration, remittances and household consumption. The paper distinguishes between the effects of emigration and the impacts of remittances received. There is a self-selection bias in the decision to send a migrant, as well as in the decision to receive remittances. To adequately correct for these selection biases, we develop a bivariate selection correction procedure. Perhaps surprisingly, the results show that households do not benefit (in terms of higher consumption growth) from receiving remittances, but rather from having migrants abroad. This suggests that not only money are remitted from abroad, but also something more subtle, which could be business ideas, belief systems, aspirations, patterns of social interaction, and other intangibles, which have been dubbed social remittances.
Topic:
Development, Migration, Economy, and Remittances
Political Geography:
Central America and Nicaragua

3. The Impact of Aid on Recipient Behavior: A Micro-Level Dynamic Analysis of Remittances, Schooling, Work, Consumption, Investment and Social Mobility in Nicaragua

Author:
Lykke E. Andersen, Bent Jesper Christensen, and Oscar Molina Tejerina
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
Remittances are a very important source of income for many Nicaraguan families. More than 40% of all households receive remittances that on average amount to 12-15% of total household income in these households. More than 30% of these households receive remittances at least monthly, implying that it is a relatively stable source of income. This paper shows that remittances do tend to reduce the vulnerability of households and increase their upward social mobility, at least as long as the households do not depend too heavily on remittances. However, remittances also cause moral hazard problems. Nicaraguans tend to reduce their labor supply in response to more remittances, and they also tend to reduce their savings rates, both of which are detrimental to long run economic growth.
Topic:
Foreign Aid, Investment, Behavior, Remittances, and Social Mobility
Political Geography:
Central America and Nicaragua