Determinants of remittances in Egypt: Do macroeconomic instability and oil price matter?

Abstract

Emigration and resulting voluminous remittance inflows have been noticeable features of the Egyptian economy since the 1960s. The main purpose of this study is to investigate the determinants of remittances – primarily the role of both macroeconomic instability and oil price – in Egypt. Using autoregressive distributed lag (ARDL) bounds testing procedure, we estimated a remittance determination equation over the period from 1980 to 2015 and found that: (1) macroeconomic instability in Egypt and increases in international oil prices promote remittances; (2) GDP growth rate in the host countries and depreciation of domestic currency spur remittances; (3) financial development is inversely related to remittances, implying that remittances and financial development are substitutes; (4) GDP growth in the home country is not significantly associated with remittances.

Examining the asymmetric effects of oil price shocks on remittances inflows: evidence from Nigeria

“…To determine whether remittance inflows asymmetrically respond to changes in oil the price in Nigeria, we utilize time-series data for 1981-2018. Following existing studies by Mallick (2017), Akcay (2019), Akcay and Karasoy (2019b), and Abbas (2020), our study formulated an eclectic model for remittance inflows incorporating oil prices, gross domestic product per capita, the misery index, 2 and exchange rate as explanatory variables:…”

“…As pointed out by Akcay and Karasoy (2019b) and Abbas (2020), oil prices and remittances are closely linked together. There are two main channels through which changes in oil prices affect remittances.…”

“…There are several studies on remittance inflows and outflows. Some of these have analyzed the determinants of remittance (Akcay and Karasoy 2019b;El-Sakka and McNabb 1999;Mayda 2010;Al-Mashat and Billmeier 2012). Several others have examined the linear or nonlinear effect of remittance on macroeconomic fundamentals such as economic growth (Cooray 2012;Jawaid and Raza 2012;Olayungbo and Quadri 2019;Olayungbo et al 2020;Das and Sethi 2019;Karikari et al 2016;Imai et al 2014;Koay and Choong 2013), human development (Adenutsi 2010;Sahoo and Sethi 2021;Sahoo et al 2020), export and trade balance (Farzanegan and Hassan 2016;Jena and Sethi 2019), and electricity consumption (Akcay and Demirtas 2015;Sahoo and Sethi 2019).…”

Remittances and Inflation in Egypt: An Econometric Study Using an ARDL Model

“…At the macro level, several empirical studies used quantitative data to investigate the macroeconomic determinants of remittance inflows to Egypt. For instance, Akçay and Karasoy (2019) found using an ARDL model that remittance inflows to Egypt were positively related to macroeconomic instability and oil prices during 1980-2015, whereas remittances inflows were not significantly associated with GDP growth in Egypt. Similarly, Qutb (2019) argued using an ARDL model that remittances are negatively associated with real exchange rate, real GDP per capita, and macroeconomic stability.…”

Are Oil Prices and Remittance Outflows Asymmetric? Evidence From Saudi Arabia

“…Although there are quite extensive studies on the linear and nonlinear impacts of oil prices on the remittance inflows (Abbas, 2020;Akçay & Karasoy, 2019), there have been few attempts to examine the impacts of oil prices on remittance outflows. For instance, Naufal & Termos (2009) document that positive innovations in oil prices have a positive impact on remittance outflows.…”