The lag effect of economic policy uncertainty on remittances

ABSTRACT

We examine the effects of economic policy uncertainty (EPU) on remittances paid by international migrants using a sample of 14 developed countries over the period spanning from 1997 to 2020. Contrary to the intuition, our results indicate that EPU has no contemporaneous effect but rather a lagged positive and significant effect on remittances paid. More specifically, we find that remittances paid per capita increase by 0.11–0.13% in the year following the period of uncertainty. These findings confirm the resiliency of remittances sent by international migrants from developed to developing countries during times of uncertainties.

KEYWORDS:

• Economic policy uncertainty
• remittances
• developed countries
• system GMM

JEL CLASSIFICATION:

• E30
• E60
• F24

Acknowledgement

We would like to thank the editor Mark Taylor and George R.G. Clarke for their helpful comments.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Given that our sample spans from 1997 to 2020, this corresponds to a time T = 24 which is fairly large.