Analyzing ofw remittances: The determinants and their implications on the movement of exchange rates

Date of Publication

2013

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Applied Economics

Subject Categories

Economics

College

Ramon V. Del Rosario College of Business

Department/Unit

Economics

Defense Panel Member

Myrna S.Austria,

Mariel Monica R. Sauler

Abstract/Summary

Over the past two decades, OFW remittances have diversified and grown, improving income distribution, easing unemploymet as well as contributing to the country's balance of payments. This paper uses estimated data on remittances to eliminate biases present in Bangko Sentral ng Pilipinas data. Utilizing 1980 to 2011 historical and estimated time series data, a macroeconomic analysis is employed to firstly deliberate whether host country CPI, GDP growth, real interest rate differential, and growth in migrant stocks impact the remittances received by the Philippines from five of the top remitting countries: US, Canada, Japan, Australia and Italy. This study additionally claims home country FDI, net exports, GDP growth and remittances to play a vital role in the Philippine exchange rate movements.

Ordinary Least Squares regression results exhibit varied relationships on remittance flows for each host country. CPI is found to have a negative impact for Australia, where cost of living is highest. Conversely, RIRD demonstrates a positive influence for investment-driven country Japan, but not in countries where migrants intend to permanently dwell. External debt is also found to be positive for Italy and Australia, where financing are required to boost competitiveness. Moreover, found to consistently display a highly significant and positive effect for all five host countries is the growth in migrant stocks. Remittance receipts from each host country, Philippine FDI and net exports also bear influence on the movement of exchange rates. These findings validate that policymakers may encourage greater remittances through formal channels, making arrangements to induce more remittance-sending activities and considering the OFWs' destination and timing of departure. Moreover, exchange rate movements may be influenced through the improvement of the country's trade balance and degree openness.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU20056

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

131 [57] leaves ; 28 cm.

Keywords

Migrant remittances; Emigrant remittances

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