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Exchange Rate Uncertainty and Workers’ Remittances: Empirical Bayesian Approach

Journal of Quantitative Methods

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Title Exchange Rate Uncertainty and Workers’ Remittances: Empirical Bayesian Approach
 
Creator Sikandar, Muhammad Jalib
Yasin, Hafiz Muhammad
Muhammad, Malik
 
Description Exchange rate is one of the important determinates of worker’s remittances to a country. Level of exchange rate as well as any fluctuation in it influences the volume of workers’ remittances. The present study uses data of workers’ remittances from ten major countries to Pakistan for the period 1973 to 2012. Uncertainty of exchange rate is estimated through GARCH model. We use Empirical Bayesian approach to compute posterior information (estimates, for which, the GMM estimates are used as prior in order to avoid biasness and inconsistency due to the presence of endogeniety in our model. The Empirical Bayesian estimates are found to be more efficient in terms of significance and correct signs of modeled variables. The findings suggest a significant role of home and host country characteristics in most of the cases. The findings also reveal a negative impact of exchange rate uncertainty on the inflow of remittances. The political instability reveals an insignificant impact on remittances. The study recommends different policy options for different host countries. Apart from the Middle East, the policy for other regions (like USA, Canada, and Germany etc.) must be considered separately to encourage inflow of remittances. Appropriate stabilization measures have to be taken on priority basis to curtail volatility of exchange rates and to ascertain regular inflow of remittances. 
 
Publisher Department of Quantitative Methods, School of Business and Economics, University of Management and Technology, Lahore Pakistan
 
Date 2019-08-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://ojs.umt.edu.pk/index.php/jqm/article/view/97
10.29145/2019/jqm/030206
 
Source Journal of Quantitative Methods; Vol 3 No 2 (2019): August; 90-109
2522-2260
2522-2252
10.29145/JQM/32
 
Language eng
 
Relation https://ojs.umt.edu.pk/index.php/jqm/article/view/97/34
 
Rights Copyright (c) 2019 Muhammad Jalib Sikandar, Hafiz Muhammad Yasin, Malik Muhammad
http://creativecommons.org/licenses/by/4.0