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Exchange rate, remittances and expenditure of foreign-bornhouseholds: evidence from Australia

Syed Hasan, Nazmun Ratna and Shamim Shakur ()
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Nazmun Ratna: Faculty of Agribusiness and Commerce, Lincoln University, Canterbury, New Zealand
Shamim Shakur: School of Economics and Finance, Massey University, Palmerston North, New Zealand

No 1901, Discussion Papers from School of Economics and Finance, Massey University, New Zealand

Abstract: We examined the impact of the depreciation of the Australian dollar (AU$) during 2013-2015 onthe expenditure of households with foreign-born members (HFBMs) in Australia. Employing the difference-in-differences method and 2013-2015 Nielson Homescan Panel Survey data, we found that HFBMs spent around 2.4 percent more on their food expenditure in 2014 and 4.0 percentmore in 2015 compared to their native counterparts. Further investigation indicated that neither incomes nor food prices nor the expenditures on imported food items changed differently for any group in that period, while an analysis with HILDA survey data indicates a similar pattern fortotal expenditures. With reduced outward aggregate remittances from Australia over the sametime, we argue that falling AU$ induces HFBMs to substitute for consumption in the homecountry with that in the host nation. Our empirical results provide fresh insights on how changesin the exchange rate may affect immigrants differently than natives.

Keywords: Australia; exchange rate; immigrant; consumption (search for similar items in EconPapers)
JEL-codes: D12 D60 I30 Z13 Z18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int and nep-mig
Date: 2019
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