The Impact of Remittance Inflows on Inflation: The Case of Lebanon

This paper investigates the impact of workers’ remittance inflows on inflation in Lebanon. The data used is monthly data spanning the period from December 2007 to May 2019. I estimate a structural vector autoregressive model using 24 monthly lags and find that a one-time remittance growth shock leads to a statistically significant increase in the inflation rate in the short run in Lebanon. Also, the results show that a remittance growth shock makes a considerable contribution to the forecast error variance for the inflation rate in Lebanon.