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Do Immigrants' Funds Affect the Exchange Rate?

Author

Listed:
  • Nusrate Aziz
  • Arusha Cooray
  • Wing Leong Teo

Abstract

Using annual data over 1966-2014 from the Citizenship and Immigration statistics archives of Canada, we investigate how the funds brought into Canada by immigrants, affects the real effective exchange rate (REER) of Canada. We employ the ARDL bounds testing (Pesaran, Shin and Smith, 1999) and Dynamic OLS (Stock and Watson, 1993) approaches to cointegration. Both estimation methods indicate a long run relation between immigrants' funds and exchange rate with immigrants’ funds leading to a significant appreciation of the exchange rate in Canada. These results are robust to different estimation methods and an alternative proxy measure for the funds brought into Canada by immigrants.

Suggested Citation

  • Nusrate Aziz & Arusha Cooray & Wing Leong Teo, 2017. "Do Immigrants' Funds Affect the Exchange Rate?," CAMA Working Papers 2017-64, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2017-64
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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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