Do immigrants’ funds affect the exchange rate?
Journal Publication ResearchOnline@JCUAbstract
Using annual data over 1966–2014 from the Citizenship and Immigration statistics archives of Canada and constructing a time series for the funds brought into Canada by immigrants, we investigate whether these funds affect the exchange rate of Canada. We employ the ARDL bound testing (Pesaran and Shin, Econometrics and economic theory in the 20th century: The Ragnar Frisch centennial symposium. Cambridge, UK: Cambridge UP, 1999), dynamic OLS (Stock and Watson, Econometrica, 1993, 61, 783) approaches to cointegration. 2SLS and GMM methods are also applied to estimate the portfolio balance models of the exchange rate. Estimated results indicate a long-run relation between immigrants’ funds and the 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.
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Volume
44
ISBN/ISSN
1467-9701
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Issue
2
Pages Count
26
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Publisher
Wiley-Blackwell
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DOI
10.1111/twec.13003