Remittances and Economic Growth in the United States: The Moderating Role of Macroeconomic Stability

Abstract

The United States is the world's largest source of international remittances, sending more than $93 billion in formal remittances in 2023 to households in other countries, as well as significant remittance-related economic activity—such as sending money abroad, using it at home, saving it, and investing it—in the communities of immigrants and their family members in the U.S. The study is quantitative, cross-sectional survey design that looks at the relationship between remittance activity and perceived growth in the United States, and tests the moderating effect of macroeconomic stability. The study surveyed 300 respondents—remittance-sending households, banking and financial services professionals, economists and policy analysts, and immigrant-owned small business owners—in four U.S. census regions. The postulated model was tested with hierarchical moderated regression analysis. Results show that remittance activity is a significant positive predictor of perceived economic growth (β = .238, p < .001) and that macroeconomic stability significantly moderates this relationship (ΔR² = .041, p = .002): the positive association between remittance activity and economic growth is markedly stronger under conditions of high macroeconomic stability than under conditions of low stability. The full model accounted for 38.7% of the variance of the perceived economic growth. Based on these results, the growth-enhancing effects of remittance-infused economic activity in the United States are not automatic and depend on a stable macroeconomic environment, which includes low volatility of inflation, interest rates, and exchange rates. Financial institutions and macroeconomic policies are discussed in terms of the policy and managerial implications.