Mechanisms of Remittances Influence on the Economy
of Ukraine
Mechanisms of Remittances Influence on the Economy
of Ukraine
Author(s): Roksolana LastovetskaSubject(s): Economy
Published by: Instytut Badań Rynku, Konsumpcji i Koniunktur
Keywords: remittances; migrant sending country; gross domestic product; inflation; interest rate; real effective exchange rate
Summary/Abstract: The purpose of the article is to highlight the impact of remittances on the economy of Ukraine. Based on statistical data for the period 2001-2014 there has been developed a small structural model that describes in details the interconnections between the amount of transfers and main macroeconomic indicators. In particular, it demonstrates the impact of remittances on GDP, inflation, interest rate and exchange rate. That small structural model confirms a direct link between the remittances inflows and economic growth of the country, emphasising transfers’ procyclicality.As well it reveals that remittances lead to the increase in interest rates, stimulating investments in Ukraine. Nevertheless, it demonstrates a neutral effect of remittances on the inflation rate in Ukraine. As for the negative consequences of remittances inflows the model confirms the effect of “Dutch disease”, since migrant remittances cause the appreciation of the national currency, reducing the competitiveness of Ukraine in the international markets.
Journal: Handel Wewnętrzny
- Issue Year: 366/2017
- Issue No: 1
- Page Range: 30-40
- Page Count: 11
- Language: English