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Impact of Macroeconomic Shocks on Remittance Inflows to Bangladesh

Jahan, Nusrat LU (2013) EKHR92 20131
Department of Economic History
Abstract
The increasing flow of remittances to Bangladesh plays a significant role in balance of payments of the country. The study investigates the dynamic long run and short run impact of macroeconomic shocks on remittance inflows to Bangladesh. The empirical analysis uses Cointegration Technique and estimates Vector Error Correction Model (VECM) for the period 1976 to 2011. The study also estimates the dynamic changes in remittances in response to shocks in the host countries for the period 1994 to 2011. We use international crude oil price as a macroeconomic indicator of economic situation outside of the home country. We find that in the long run remittance inflows tend to increase during periods of crises. However, in the short run, for... (More)
The increasing flow of remittances to Bangladesh plays a significant role in balance of payments of the country. The study investigates the dynamic long run and short run impact of macroeconomic shocks on remittance inflows to Bangladesh. The empirical analysis uses Cointegration Technique and estimates Vector Error Correction Model (VECM) for the period 1976 to 2011. The study also estimates the dynamic changes in remittances in response to shocks in the host countries for the period 1994 to 2011. We use international crude oil price as a macroeconomic indicator of economic situation outside of the home country. We find that in the long run remittance inflows tend to increase during periods of crises. However, in the short run, for instance in a five-year period macroeconomic shocks have very insignificant or no impact on remittances. We also find that remittance flows are mainly driven by altruism motive but it also depends on the country’s investment. Empirical estimation shows that remittance flows are higher in a supportive environment for investment. (Less)
Please use this url to cite or link to this publication:
author
Jahan, Nusrat LU
supervisor
organization
course
EKHR92 20131
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Macroeconomic Shocks, Remittance Inflows
language
English
id
3972150
date added to LUP
2013-09-03 10:43:04
date last changed
2013-09-03 10:43:04
@misc{3972150,
  abstract     = {The increasing flow of remittances to Bangladesh plays a significant role in balance of payments of the country. The study investigates the dynamic long run and short run impact of macroeconomic shocks on remittance inflows to Bangladesh. The empirical analysis uses Cointegration Technique and estimates Vector Error Correction Model (VECM) for the period 1976 to 2011. The study also estimates the dynamic changes in remittances in response to shocks in the host countries for the period 1994 to 2011. We use international crude oil price as a macroeconomic indicator of economic situation outside of the home country. We find that in the long run remittance inflows tend to increase during periods of crises. However, in the short run, for instance in a five-year period macroeconomic shocks have very insignificant or no impact on remittances. We also find that remittance flows are mainly driven by altruism motive but it also depends on the country’s investment. Empirical estimation shows that remittance flows are higher in a supportive environment for investment.},
  author       = {Jahan, Nusrat},
  keyword      = {Macroeconomic Shocks,Remittance Inflows},
  language     = {eng},
  note         = {Student Paper},
  title        = {Impact of Macroeconomic Shocks on Remittance Inflows to Bangladesh},
  year         = {2013},
}