Flow of Migrants’ Remittances into Sudan: the Role of Macroeconomic Environment

Ebaidalla Ebaidalla and Abdalla Edriess

No 741, Working Papers from Economic Research Forum

Abstract: Considering the importance of migrants’ remittances as a vital source of financing economic development and foreign exchange in Sudan’s economy, this study investigated the role of macroeconomic environment in attracting migrants’ remittances into Sudan. To do so, the study used the Autoregressive Distributed Lag (ARDL) to cointegration method, Impulse Response Functions (IRSs) and Variance Decomposition (VDC) techniques. The empirical results indicate that macroeconomic policy variables play an important role in encouraging the flow of remittances via formal channels. The inflation rate and the black market exchange rate premium have a negative and significant effect on remittances in both the short and long-run. The home income variable is found to be discouraging for the flow of remittances, supporting the altruistic behaviour of emigrants in transferring money. Moreover, the study found that trade openness and foreign income exerts positive effects on remittances. Based on these findings, the paper concludes with some policy implications regarding the improvement of the macroeconomic environment as a necessary condition to facilitate the flow of remittances through official channels.

Pages: 25
Date: 2012, Revised 2012
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Citations: View citations in EconPapers (1)

Published by The Economic Research Forum (ERF)

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