Analysis of Philippine remittances flow using country-level COVID-19 government responses
Date
2022-01
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Abstract
This study provides a new approach to analyzing Philippine remittances flow by using the
COVID-19 government responses of both the Philippines and source countries in lieu of traditional
determinants of remittances, which reflect migrant workers’ altruism. This study examines whether such
an approach provides a reliable explanation consistent with the altruism hypothesis and whether COVID-
19 government responses can be effective substitutes to the traditional determinants of remittances when a
pandemic shock takes place. To represent COVID-19 government responses, the study utilizes four
COVID-19 indices for the Philippines and each of the 11 sample source countries constructed from the
Oxford COVID-19 Government Response Tracker data. The study employs Ordinary Least Squares
(OLS) Regression to determine the relationship between remittances and COVID-19 government
responses. The study utilizes one regression model for remittances and source country COVID-19 indices
and another model for remittances and home country COVID-19 indices. To test the validity of these
COVID-19 response-based specifications, the study examines how well they fare in econometric terms
based on the OLS regressions. The results reveal that the first and second models are 65.91 percent and
38.64 percent accurate, respectively, in demonstrating the hypothesized effect of COVID-19 government
responses on remittances. The study shows that when source and home country COVID-19 indices are
less synchronized, the hypothesized effects become more prominent with the right signs and are
statistically significant.
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Keywords
remittances, COVID-19