The Relationship between Remittances and Savings in Small Pacific Island States: Some Econometric Evidence

In: Asian and Pacific migration journal: APMJ, Volume 4, Issue 1, p. 117-138

Abstract

The relationship between remittances and savings is examined for Tonga and Western Samoa using an econometric modelling approach. Savings deposits of various types held in banks in these countries are modelled and evidence is discovered of a strong relationship with the income level of migrants. Remittances are also found to be interest sensitive. The implications of the results for the "remittance decay" hypothesis are considered and preliminary conclusions are drawn with regard to the feasibility of introducing strategies to increase migrant saving flows into these and other South Pacific countries.