Browsing by Author "Penuel Nyaanga Ondieng’a"

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    EFFECT OF FOREIGN REMITTANCES ON PRIVATE CONSUMPTION, INVESTMENT, IMPORT AND OUTPUT IN EAST AFRICA COMMUNITY
    (International Journal of Social Science and Economic Research, 2017-06-06) Penuel Nyaanga Ondieng’a; Dr. Alphonce Juma Odondo (PhD); Dr. Benjamin Owuor Ombok (PhD)
    Foreign remittances to East Africa Community (EAC) have increased considerably in the past two decades becoming one of the largest sources of foreign currency earnings. However, despite the remarkable growth of remittances in EAC, little has been researched on its effect on consumption, investment, import and output at macro level. Most of the available literatures concentrates on its effect on poverty reduction at household levels. This study, therefore, sought to empirically test the link between remittances and consumption, investment, import and output. The study used correlational research design anchored on a linear Keynesian macroeconomic model with a dynamic outlook. Panel data set for the period 2000-2014 from the World Bank database for the five EAC countries, namely; Kenya, Uganda, Tanzania, Rwanda and Burundi were used. The study used a Two Stage Least Square (TSLS) method of estimation and established that of foreign remittances have a positive effect on private consumption, investment, import and output in EAC. The study recommends that macroeconomic policies should focus on its sustainability to promote economic growth and makes implications for policy and further research.
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    EFFECT OF FOREIGN REMITTANCES ON SELECTED MACROECONOMIC VARIABLES IN EAST AFRICA COMMUNITY
    (International Journal of Economics, Commerce and Management, 2017-05-20) Penuel Nyaanga Ondieng’a; Alphonce Juma Odondo; Benjamin Owuor Ombok
    Over the years, remittances in East Africa Community (EAC) have grown remarkably becoming the second largest capital flow after Official Development Assistance (ODA). However, most of the studies conducted on its effects are non EAC specific and have not expanded the analysis beyond output to other macroeconomic variables like consumption, investment and imports. This study therefore, sought to empirically test the link between remittances and its effect at macro level in EAC. The study was anchored on the Keynesian model of Economic growth and was guided by correlational research design. Panel data set for the period 1985-2014 from theWorld Bank database for the five EAC countries consisting of Kenya, Uganda, Tanzania, Rwanda and Burundi were used. The study used Two Stage Least Square (TSLS) method of estimation and established that foreign remittances have positive effects in EAC, an increase ofremittances by one dollar, through impact and dynamic multiplier effects increased consumption, investment, import and output. However, the impact is in the first year and wears out in the subsequent years with exception of Rwanda where it reduces gradually over a fouryear period. The study concludes that foreign remittances have significant positive effects on consumption, investment, import and output. Macroeconomic policies should therefore, focus on its sustainability to promote economic growth. At the end, study makes implications for policy and further research.