An Econometric Approach Towards Exploring the Impact of Workers Remittances on Inflation: Empirical Evidence from India

Title

An Econometric Approach Towards Exploring the Impact of Workers Remittances on Inflation: Empirical Evidence from India

Creator

Jain V.; Mathur M.

Description

This paper attempts to study short and long run impact of increased workers remittances on general price level. It uses the real GDP growth, real effective exchange rate (REER), M3 (broad money), fiscal deficit to gauge the impact of foreign remittances on inflation. The study makes use of VAR/VECM framework to gauge the impact of workers remittances on inflation. Inflation is measured in terms of CPI and WPI, real income or GDP at constant prices is taken as a measure of GDP growth, REER is used for exchange rates and M3 is taken as a proxy for money supply. Monthly data of all these variables has been taken from Bloomberg and World Bank data base. The findings provide important insights into the nature of association between remittances and inflation suggesting causality between inflation, remittances, real GDP, real effective exchange rates and money supply due to increased workers remittances. The findings have policy implications for decisions to channelize workers remittances in a way to increase real GDP growth and money supply while at the same time not causing the general price levels to soar. The present study focuses on how increased (decreased) workers remittances is leading to increase (decrease) in general price levels in India. 2022, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

Source

Springer Proceedings in Business and Economics, pp. 293-303.

Date

2022-01-01

Publisher

Springer Science and Business Media B.V.

Subject

Consumer price index; Exchange rate; GDP; Granger causality; Inflation; Money supply; Vector autoregression; Wholesale price index; Workers remittances

Coverage

Jain V., Christ (Deemed University), Pune, Lavasa, India; Mathur M., Manipal University Jaipur, Jaipur, India

Rights

Restricted Access

Relation

ISSN: 21987246; ISBN: 978-981167817-2

Format

Online

Language

English

Type

Conference paper

Identifier

https://doi.org/10.1007/978-981-16-7818-9_14

https://www.scopus.com/inward/record.uri?eid=2-s2.0-85125316330&doi=10.1007%2f978-981-16-7818-9_14&partnerID=40&md5=5d56d26efb056e3d4595a0047e188e52