Migration Remittances Infl ows and Macroeconomic Shocks: The Case of Egypt

Journal Article

• Magazine \ Newspaper: International Journal of Economics and Financial Issues
• Issue Number: 4
• Volume Number: 5
• Pages: 1-10

Publication Abstract

This paper explores to what extent Egyptian remittances infl ows serve as a hedge against macroeconomic shocks. This is the fi rst study applied on Egypt focusing on both the determinants of remittances and their cyclical behavior at the same time. By estimating a vector error correction model, it was found that remittances infl ows were associated signifi cantly with real per capita income, money supply and oil price, in both long and short run. This indicated that remittance fl ows to Egypt were for investment and not for family support purposes. The analysis of impulse response functions confi rmed that remittances infl ows were procyclical with output shocks, reducing support for the ability of remittances as a hedge against macroeconomic shocks. This paper suggests that; policy makers should deal cautiously with the different aspects of remittances and its analysis could be applied to other small open economies.