Remittances in the Monetary Policy Transmission Mechanism: Evidence from India

Remittances have become a vital component of India's economy, with the country consistently ranking among the top recipients of international remittances. This influx of foreign exchange earnings has significant implications for India's macroeconomic dynamics, influencing economic growth, poverty reduction, and household well-being. This study explores the trends, patterns, and impact of remittances in India, highlighting the country's unique characteristics and regional variations. This study examines the dynamic relationship between remittances and GDP growth using a Generalized Additive Model (GAM) framework combined with Impulse Response Function (IRF) analysis. By modeling the non-linear effects of remittances on economic growth, this research provides new insights into the complex interactions between these variables. To assess the impact further ARDL model has been used after making certain additions to it.