Remittances and Inflation in Egypt: An Econometric Study Using an ARDL Model

Abstract

This paper analyzes the impact of remittance inflows on inflation in Egypt. It uses an Autoregressive Dis- tributed Lag (ARDL) model to identify the short-run and long-run sources of inflation in Egypt during 1975- 2019, while including remittance inflows among the inflation determinants. The results show that remittance inflows to Egypt have inflationary pressures in the long run, whereas such inflationary pressures are not con- firmed in the short run. Other sources of inflation in the long run include the output gap, money supply, and openness. The results indicate the exchange-rate pass through effect is transitory, since it exists only in the short run