Impact of Monetary Policy to Enhance Remittances for Economic Growth in Asia : The Case of Bangladesh

Objective: Remittances are a vital component of liquidity flows in Bangladesh. This paper evaluates the role of monetary policy in enhancing remittances for economic growth.Methodology: The vector autoregressive methodology is applied with two stage deductions. The monetary policy rate first impacts intervening variables-exchange rate, interest rate, inflation etc-which in turn impact remittance flows. The data set are tested for temporal properties, including unit roots and co-integration.Major Findings: Preliminary evidence shows that domestic economic prosperity increases remittances to Bangladesh; while exchange rate depreciation depresses remittances. The latter outcome reflects remitters' perception that a stronger Taka is a sign of thing-getting-better-back-home