Workers' Remittances and Economic Growth in Palestine: Evidence from A Computable General Equilibrium Model

While few people would differ on the economic benefits of remittances to recipients in home economies, the level to which remittances add to economic growth and development is another question. Workers’ remittances are one of the largest sources of external financial flow to developing economies. This paper analyzes the impacts of workers' remittances on the Palestinian economy using a computable general equilibrium model. A simulation of workers' remittances increase is carried out using a 2015 Palestinian Social Accounting Matrix (SAM). The simulation results show that real GDP increases by 0.42 percent . The level of real private consumption increases by 4.95 percent . Import increases by 4.28 percent and export declines by 6.86 percent in real term. Net taxes increases by 2.29 percent , the trade deficit increases by 10.16 percent and absorption increases by 3.24 percent in real terms. In addition, the real exchange rate appreciated by 1.6 percent from the base line.