Remittance and Inflation - An Empirical Study for Vietnam

Abstract

Article HistoryRemittances have recently received such a great attention as private monetary flows that its monetary nature seems to be disregarded. The issue that whether remittance flows are inflationary, resulting in a change in relative price, remains controversial. This study utilizes a reduced-form VAR model to investigate the inflation's response to a positive shock to the remittance based on Ball et al. (2009)'s study. We use a quarterly data from 1st quarter 1996 to 3rd quarter 2012. The main findings are that first, there exists a positive effect of remittance on inflation in Vietnam and this effects prolong up to three quarters; second others main macroeconomic factors also affect inflation but at a lower magnitude compared with remittances. Contribution/ Originality:This study is one of very few studies which have investigated the impact of remittance on inflation in Vietnam. We found that remittance is a key driving factor of inflation during the past twenty years. This finding suggests that Vietnam's government should manage remittance to fight inflation.

To Mull Remittance and Misery Index of Selected Asian Countries: A Panel ARDL Approach

“…The findings of Diego and Ruby (2014) also highlighted positive relationship between inflation and remittance. There are other factors which have positive relationship with inflation but the magnitude is small in contrast with remittances (Hai & Doan, 2017).…”