Content area
Full Text
Officially recorded remittance1 flows to the developing countries reached the level of US $ 400 billion and US $ 414 billion in 2012 and 2013 respectively and are projected to reach US $ 435 billion in 2014, an increase of 5 per cent over 2013. This study, covering the period from 1991 to 2012, makes an attempt to identify the macroeconomic determinants of remittance to a panel of 24 emerging and developing economies. While remittances are considered as the dependent variable,World GDP, Bilateral nominal exchange rate of local currencies of recipient nations vis-a-vis US $ and Consumer Price Index (CPI)of recipient nations are considered as the explanatory variables. The study uses a panel data analysis by applying methodologies, viz., Pooled OLS model, Fixed Effects Model and Random Effects Model. The study also conducts Redundancy test and Hausman test. Regarding determinants of remittances, the elasticity of remittances with respect to world GDP, bilateral nominal exchange rates, CPI is found to be significant, which shows that both host as also home country2 macroeconomic factors have influenced the magnitude of remittances to the panel of 24 countries.
Keywords: Remittances, Panel Data Analysis, FEM, REM
(ProQuest: ... denotes formulae omitted.)
Introduction
Officially recorded remittance flows to the developing countries reached the level of US $ 400 billion and US $ 414 billion in 2012 and 2013 respectively and are projected (World Bank, 2014) to reach US $ 435 billion in 2014, an increase of 5 per cent over 2013. These are expected to rise further, though at a lower rate, by 4.4 per cent to US $ 454 billion in 2015. It is also expected that the annual rise in remittance flows will be sustained at the level of 4-5 percent and remittances will record a level of US $ 499 billion in 2017. India is projected to be the highest remittance recipient nation in the world in 2014 also,with projected remittance flows of US $ 71 billion during 2014, closely followed by China with projected remittance flows of US $ 64 billion in the said year.
Remittances are one of the most important and stable sources of funds for the developing countries. While other financial flows to the developing countries showed sizeable decline, mostly owing to the...