The impact of remittance inflows on inflation: Evidence in asian and the pacific developing countries

Remittance is one of the most important external sources flowing into developing countries. Many studies have examined the impact of remittances on macroeconomic issues. However, there is a gap of empirical research on the impact of remittances on inflation in Asian and the Pacific developing countries. This study applied such econometrics methods as Ordinary Least Squares (OLS), Two-Stage Least Squares (2-SLS), Panel Generalized Method of Moments (PGMM) and panel Granger causality to investigate this impact. Annual data for the period 1985 – 2013 of 32 developing countries in Asian and the Pacific is used in this study. The results found that remittance inflows significantly increase inflation during the research period and there exists a one-way Granger causality from remittances to inflation.