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

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  • Bist, Jagadish Prasad

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.

Suggested Citation

  • Bist, Jagadish Prasad, 2025. "Too much remittance? Growth-dependent asymmetric effects in a low-income economy," Economics Letters, Elsevier, vol. 254(C).
    • Handle: RePEc:eee:ecolet:v:254:y:2025:i:c:s0165176525002575
    DOI: 10.1016/j.econlet.2025.112420
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    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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