Do Remittances Reduce Poverty? Empirical Study from Indonesia

Sat, 10 Oct 2026 00:00:00 +0000

This study investigates the effect of Indonesian Migrant Workers (IMW) remittances on poverty, taking into account the mediating role of regional economic growth, using balanced panel data from 34 provinces in Indonesia over 2020–2024. A two-stage mediation approach was applied using Random Effects (GLS) estimation with robust standard errors. Model selection was conducted through the Chow Test, Hausman Test, and Breusch-Pagan LM Test, which consistently confirmed Random Effects as the best estimator for both stages. Mediation effects were assessed using the Sobel test. Stage 1 results show remittances have a positive and significant effect on regional economic growth (β = 0.5678, p < 0.01). Stage 2 results show remittances directly and significantly reduce poverty (β = −2.1649, p < 0.05), while regional economic growth is not statistically significant (p = 0.508). The Sobel test confirms that economic growth does not serve as a mediator (Z = 0.656, p = 0.512), indicating that remittances reduce poverty mainly through direct household income transfers rather than through stimulating aggregate regional output. Control variables HDI and UNEMP are both significant. These findings align with the short-run predictions of the Lewis Two-Sector Model and the non-inclusive growth phenomenon in Indonesia. Policy implications include reducing remittance transfer costs, improving financial literacy among IMW families, and pursuing more inclusive economic growth strategies in migrant-sending regions.

Exchange Rate Policy and Macroeconomic Price Stability Analysis

Chinedu A. Okafor — Thu, 08 Oct 2026 00:00:00 +0000

Exchange rate policy constitutes an important component of macroeconomic management because movements in the value of a domestic currency can influence import prices, production costs, inflation expectations, external competitiveness, and ultimately overall price stability. This research and review article examines the analytical relationship between exchange rate policy and macroeconomic price stability through a structured conceptual framework. The study adopts a qualitative research-review methodology based on critical examination and thematic interpretation of the references supplied for the study. Particular attention is given to the transmission mechanisms through which exchange-rate decisions may affect domestic price conditions, including import-cost transmission, expectations, external-sector adjustment, and policy credibility. The review also identifies an important limitation in the available evidence base: the supplied literature primarily examines social media marketing and consumer behaviour rather than exchange-rate regimes or macroeconomic inflation dynamics. Consequently, the findings are interpreted as a conceptual framework rather than as statistically validated estimates of exchange-rate effects. The analysis suggests that exchange-rate policy should be evaluated as part of a broader macroeconomic stabilization framework rather than as an isolated instrument. Effective policy requires consistency between exchange-rate management, monetary conditions, inflation expectations, external-sector objectives, and domestic economic fundamentals. The study contributes by identifying the conceptual dimensions required for evaluating exchange-rate policy while highlighting the need for topic-specific empirical research.

Frontline Marketing, Management and Economics Journal

Do Remittances Reduce Poverty? Empirical Study from Indonesia

Exchange Rate Policy and Macroeconomic Price Stability Analysis