The Impact of Remittances on Inflation in South Asian Association for Regional Cooperation (SAARC)Countries

Year 2024, Volume: 13 Issue: 1, 23 - 34, 30.04.2024

Mohammad Tawfiq Noorzai

Abstract

Remittances are a critical financial phenomenon, representing a substantial source of income with significant global economic impact. This paper explores the dynamics of remittances in the South Asian Association for Regional Cooperation (SAARC) countries. Remittances play a pivotal role in the economies of these countries, especially in the wake of the COVID-19 pandemic, which saw an increase in remittances despite economic uncertainties. However, the relationship between remittances and inflation in this region remains underexplored. Our study aims to address this gap by investigating the impact of remittances on inflation over the long and short terms in SAARC countries. The study covers a 13-year period, from 2008 to 2020, and utilizes a comprehensive dataset. Methodologically, the research employs the robust Panel Least Squares methodology to navigate the complexities arising from variations over time and across diverse entities. Leveraging a comprehensive dataset meticulously curated from reputable sources such as the World Development Indicator (WDI) and the International Monetary Fund (IMF), the study scrutinizes the multifaceted determinants of remittance patterns in the SAARC region.
Empirical findings shed light on several influential variables, with Money Supply (MS), Government Expenditure (GOVT_EXP), Imports (IMPORT), and Exports (EXPORT) emerging as significant factors impacting remittances. Intriguingly, the study reveals a negative association between inflation (INF) and remittances, signifying that higher inflation levels correlate with decreased remittance flows.While the model exhibits a moderate fit, as evidenced by an R-squared value indicating that approximately 51.49% of the variability in remittances is explicable by the included variables, the Durbin-Watson statistic raises concerns about potential autocorrelation in the residuals. This underscores the need for further exploration to fortify the model's efficiency and ensure unbiased results. Contributing to the extant literature, this study illuminates the underexplored nexus between remittances and inflation in SAARC countries, providing a foundation for informed economic policy decisions. The use of a rigorous methodology and a comprehensive dataset underscores the reliability of the findings. Additionally, implications arising from the results are discussed, and avenues for future research are highlighted, emphasizing the continual refinement of models to capture the nuanced dynamics of remittance patterns in the SAARC region. The research not only enriches our understanding of economic intricacies within SAARC countries but also propels the trajectory of scholarly inquiry into the multifaceted dimensions of remittances and their economic ramifications.

Keywords

Remittances, Inflation, SAARC countries, Panel Least Squares, Long-term and short-term effects.

Göçmen Gönderimlerinin Güney Asya Bölgesel İşbirliği Teşkilatı (SAARC) Ülkelerinde Enflasyon Üzerindeki Etkisi

Abstract

Bu çalışma, Güney Asya Bölgesel İşbirliği Birliği (GASİB) ülkelerinde göçmen transferlerinin enflasyon üzerindeki etkisini incelemekte olup, 2008'den 2020'ye kadar olan dönemi kapsamaktadır. Güçlü Panel En Küçük Kareler yöntemi ve kapsamlı bir veri seti kullanılarak, araştırma göçmen transferi desenlerinin çok yönlü belirleyicilerini keşfetmektedir. Ampirik bulgular, göçmen transferlerini etkileyen Para Arzı, Hükümet Harcamaları, İthalat ve İhracat gibi önemli faktörleri ortaya koymaktadır. İlginç bir şekilde, enflasyon ile göçmen transferleri arasında negatif bir ilişki olduğu, yani yüksek enflasyonun azalmış göçmen transferleri ile ilişkili olduğu bulunmuştur. Model makul bir uyum sergilese de, hatalardaki potansiyel otokorelasyon konusundaki endişeler, modelin etkinliğini güçlendirmek ve önyargısız sonuçlar elde etmek için daha fazla keşfe ihtiyaç olduğunu vurgulamaktadır. Çalışma, GASİB ülkelerinde göçmen transferleri ile enflasyon arasındaki az araştırılmış bağlantıya ışık tutarak, modellerin nüanslı dinamikleri yakalama önemini vurgulamaktadır.

Keywords

Enflasyon, SAARC ülkeleri, Panel Least Squares, Uzun vadeli ve kısa vadeli etkiler, Göçmen Gönderimleri

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