Determinants of remittances in Egypt: Do macroeconomic instability and oil price matter?

Emigration and resulting voluminous remittance inflows have been noticeable features of the Egyptian economy since the 1960s. The main purpose of this study is to investigate the determinants of remittances – primarily the role of both macroeconomic instability and oil price – in Egypt. Using autoregressive distributed lag (ARDL) bounds testing procedure, we estimated a remittance determination equation over the period from 1980 to 2015 and found that: (1) macroeconomic instability in Egypt and increases in international oil prices promote remittances; (2) GDP growth rate in the host countries and depreciation of domestic currency spur remittances; (3) financial development is inversely related to remittances, implying that remittances and financial development are substitutes; (4) GDP growth in the home country is not significantly associated with remittances.