Do Remittances Cause Inflation? Long-Run Evidence from Tajikistan
Do Remittances Cause Inflation? Long-Run Evidence from Tajikistan

Summary/Abstract: This paper examines how remittances (REM) affect inflation in Tajikistan from Q4 of 2004 to Q4 of 2022, using the autoregressive distributed lag bounds test for the long-term effects of REM, government spending (GE[Q2.1][DBK2.2]), money supply (MS), exchange rate (EXR), growth and investment (INV) on inflation. Results indicate REM increase inflation by 0.22%, while GE reduces it by 1.7%. Both GE and MS significantly lower inflation; REM, EXR and growth tend to raise it. The INV’s effect is insignificant. The study contributes country-specific insights on inflation dynamics in a remittance-dependent, post-Soviet economy, highlighting the roles of REM, fiscal policy and EXRs within Tajikistan’s context. It also employs a machine learning method, random forest (RF), to evaluate predictive feature importance, capturing non-linear associations often missed by linear models. These RF results are presented as predictive insights rather than as evidence of structural causality.

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