The Responsiveness of Remittances to the Oil Price: The Case of the GCC

Naufal, George; Termos, Ali

doi:10.2139/ssrn.1434611

Cited by 3 publications

(1 citation statement)

References 8 publications

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“…For instance, they reported that in Saudi Arabia remittance outflows uncorrelated with oil prices in recent years. Also, Naufal and Termos (2009) examined the elasticity of remittances from the GCC concerning the price of crude oil. They find that the response of remittances to changes in the price of oil is inelastic (less than 0.5).…”

Section: Literature Reviewmentioning

confidence: 99%

The response of remittances inflows to asymmetric oil price shocks in Egypt

Zahran

2019

REPS

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Purpose The purpose of this paper is to explore and analyse the dynamic relationship between remittances inflows of Egyptians working abroad and asymmetric oil price shocks. Design/methodology/approach This study uses a vector autoregressive (VAR) model to explain the impulse response functions (IRFs) and the forecast error variance decomposition (FEVD). The rationale behind using these tools is its ability to examine the dynamic effects of our variables of interest. Findings The impulse response functions confirmed that remittance inflows have various responses to asymmetric oil price shocks. For instance, inflowing remittances increase in response to positive oil price shocks, while it decreases in response to negative oil price shocks. Also, the results indicate that the responses are significant in the short and medium-run and insignificant in the long run. The magnitude of these responses reaches its peak or trough in the third year. Further, the variance decomposition reveals that oil price decreases are more influential than oil price increases. Originality/value This means that remittances inflows in Egypt are pro-cyclical with oil price shocks. That explained by the fact that more than one-half of those remittances sent from GCC countries where real economic growth is very pro-cyclical with the oil prices. This empirical assessment will help policymakers to determine the behaviour of remittances and highlights the impact of different kinds of oil prices shocks on remittances. Unlike the little existing literature, this study is the first study applied the VAR model using a novel dataset spanning 1960-2016.

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Section: Literature Reviewmentioning

confidence: 99%

The response of remittances inflows to asymmetric oil price shocks in Egypt

Zahran

2019

REPS

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Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development

2022

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Does Remittance Outflow Stimulate or Retard Economic Growth?

Khan

Tao

et al. 2019

International Migration

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This article evaluates the association between remittance outflow (RMO) and economic growth in the Gulf Cooperation Council (GCC) countries. The results of this evaluation indicate that RMO Granger creates gross domestic product (GDP) per capita in three countries, namely, Bahrain, Oman and Saudi Arabia. Similarly, the results for causality from GDP per capita to RMO are significant for four countries, namely, Bahrain, Kuwait, Qatar, and Saudi Arabia. The findings differ from those of the household consumption model, stating that higher RMO will decrease economic activity. GDP per capita is the main determinant of RMO, suggesting that economic growth promises and encourages continuous RMO and vice versa. The adverse impact of RMO can be minimized by encouraging the local population to be productive in the private sector, as local productivity will reduce the huge influx of foreign workers and provide valuable local investment opportunities to lessen the amount being remitted.

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The Responsiveness of Remittances to the Oil Price: The Case of the GCC

Cited by 3 publications

References 8 publications

The response of remittances inflows to asymmetric oil price shocks in Egypt

The response of remittances inflows to asymmetric oil price shocks in Egypt

Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development

Does Remittance Outflow Stimulate or Retard Economic Growth?

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