Remittances and volatility in private consumption: empirical evidence in Asia Pacific countries

Abstract

Private consumption volatility is harmful for macroeconomic stability. The role of remittances in stabilizing private consumption in developing countries has been received much attention in the existing literature. The present study’ aim is to investigate the impacts of personal remittances on private consumption volatility. Panel data consists of 22 countries in Asia Pacific over the period of 2002-2013. By employing GMM estimation, the study highlights that the remittance has a positive effect on private consumption and has a significant contribution to private consumption stability. These findings suggest that remittance is one of important determinants of macroeconomic stability in Asia Pacific countries.