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Bilateral Remittance Inflows to Asia and the Pacific: Countercyclicality and Motivations to Remit

Author

Listed:
  • KIJIN KIM

    (Economic Research and Development Impact Department, Asian Development Bank (ADB), Metro Manila, Philippines)

  • ZEMMA ARDANIEL

    (Economic Research and Development Impact Department, Asian Development Bank (ADB), Metro Manila, Philippines)

  • AIKO KIKKAWA

    (Economic Research and Development Impact Department, Asian Development Bank (ADB), Metro Manila, Philippines)

  • BENJAMIN ENDRIGA

    (Economic Research and Development Impact Department, Asian Development Bank (ADB), Metro Manila, Philippines)

Abstract

This paper examines the cyclicality of remittance inflows to economies in Asia and the Pacific, aiming to identify major factors associated with remittances using gravity models of bilateral remittances. An analysis that assesses correlation coefficients between the cyclical factors of remittances and gross domestic product suggests that remittances tend to be countercyclical, or acyclical, against the business cycle of the remittance-receiving economy relative to the sending economy. This observation is confirmed by the gravity models of bilateral remittances. Furthermore, the estimation results suggest that migrant stock is one of the most significant factors affecting bilateral remittances. The study also shows that an increase in bilateral remittances can be attributed to a higher occurrence of disasters triggered by natural hazards in receiving economies, an appreciation of the receiving economy’s currency value against the sending economy’s, a lower interest rate differential (receiver–sender), greater capital account openness, more political instability, and lower costs of remittances.

Suggested Citation

  • Kijin Kim & Zemma Ardaniel & Aiko Kikkawa & Benjamin Endriga, 2024. "Bilateral Remittance Inflows to Asia and the Pacific: Countercyclicality and Motivations to Remit," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 41(02), pages 257-300, September.
  • Handle: RePEc:wsi:adrxxx:v:41:y:2024:i:02:n:s0116110524500070
    DOI: 10.1142/S0116110524500070
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    More about this item

    Keywords

    Asia and the Pacific; business cycle; countercyclicality; gravity model; remittances;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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