Too much remittance? Growth-dependent asymmetric effects in a low-income economy

Jagadish Prasad Bist

Economics Letters, 2025, vol. 254, issue C

Abstract: Despite a growing body of literature, studies on the remittance–growth relationship seldom account for asymmetries across different growth phases, often relying on linear estimation techniques. This study addresses these gaps by examining the asymmetric impact of changes in remittance inflows on economic growth, using Nepal as a case study. After adjusting for significant periods such as the civil war and COVID-19, we find that the effect of remittances is contingent on economic conditions and the rate of change in remittances. More specifically, our findings suggest that remittances are growth-friendly only when the country is experiencing rapid economic growth. During normal periods, changes in remittances have little to no impact or are counterproductive. This nuanced understanding challenges the efficacy of uniform remittance policies across different growth phases.

Keywords: Workers’ remittances; Economic growth; Asymmetry; Nepal (search for similar items in EconPapers)
JEL-codes: C32 E32 F24 O11 O53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525002575

DOI: 10.1016/j.econlet.2025.112420

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