Do Immigrants’ Funds Affect the Exchange Rate?
32 Pages Posted: 27 Oct 2017 Last revised: 30 Oct 2017
Date Written: October 26, 2017
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.
Keywords: Immigration, Immigrants' Money, Exchange Rate, Canada
JEL Classification: F31, F41
Suggested Citation: Suggested Citation