Do Immigrants’ Funds Affect the Exchange Rate?

32 Pages Posted: 27 Oct 2017 Last revised: 30 Oct 2017

See all articles by Nusrate Aziz

Nusrate Aziz

Department of Business and Economics, Algoma University

Arusha Cooray

UNSW Australia Business School, School of Economics

Wing Leong Teo

University of Nottingham

Date Written: October 26, 2017

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.

Keywords: Immigration, Immigrants' Money, Exchange Rate, Canada

JEL Classification: F31, F41

Suggested Citation

Aziz, Nusrate and Cooray, Arusha and Leong Teo, Wing, Do Immigrants’ Funds Affect the Exchange Rate? (October 26, 2017). CAMA Working Paper No. 64/2017. Available at SSRN: https://ssrn.com/abstract=3060103 or http://dx.doi.org/10.2139/ssrn.3060103

Nusrate Aziz

Department of Business and Economics, Algoma University ( email )

1520 Queen St. East
Sault Ste. Marie, Ontario P6A 4G4
Canada

Arusha Cooray (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Wing Leong Teo

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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