The Macroeconomic Determinants of Migrants’ Remittances in Egypt: An Ardl Bounds Testing Approach

Abstract

Remittance inflows to Egypt have been increasing rapidly for the last three decades, making it one of the largest remittances- receiving country in the world and the leading one in the Middle East region. Theoretically remittances could help avoid balance of payment crisis, provide a constant source of foreign exchange and reduce the poverty severity in home developing countries, hence, representing a vital channel for sustainable economic development. Thereby it is worthy to figure out the key remittances-influencing factors to examine the elements to which remittances are sensitive to. Accordingly, this paper aims at identifying the macroeconomic determinants of migrants‟ remittances to Egypt during the period (1980-2018). Through applying ARDL model. Findings reveal that variables concerning exchange rate, GDP per capita, political and economic condition in the home country are statistically significant supporting the remittances decay hypothesis and confirming that remittances hedge against macroeconomic shocks and appear to be counter-cyclical. This calls for a policy of a sustained economic growth that directed remittance savings toward productive domestic investments.