This paper examines how remittances-to-GDP are conditionally associated with GDP growth upswings and downturns in four lower-middle-income countries (LMICs) in mainland Southeast Asia—Cambodia, Laos, Myanmar, and Vietnam (CLMV)—over 2000–2021, conditional on other external inflows including foreign direct investment (FDI), official development assistance (ODA),
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This paper examines how remittances-to-GDP are conditionally associated with GDP growth upswings and downturns in four lower-middle-income countries (LMICs) in mainland Southeast Asia—Cambodia, Laos, Myanmar, and Vietnam (CLMV)—over 2000–2021, conditional on other external inflows including foreign direct investment (FDI), official development assistance (ODA), and trade openness. Employing a nonlinear Autoregressive Distributed Lag (N-ARDL) model with a Dynamic Fixed Effects (DFE) estimator, this study estimates short- and long-run regime-differentiated associations between GDP growth regimes and remittances to GDP, controlling for foreign direct investment (FDI), official development assistance (ODA), and trade openness. GDP growth is decomposed into above- and below-median regimes, allowing the model to examine whether remittance dynamics differ across growth upswings and downturns. Panel estimates are complemented with dynamic multipliers that trace conditional adjustment paths over different horizons. The results reveal a high-growth-driven regime pattern rather than formal statistical evidence of unequal high- and low-growth coefficients. In the long run, above-median growth significantly reduces remittances to GDP (
, very strong evidence), consistent with the household insurance motive; below-median growth has no significant long-run association (
, no evidence). In the short run, above-median growth is positively associated with remittances (
, very strong evidence), while below-median growth again shows no significant short-run response (
, no evidence). Formal Wald tests do not reject equality between the high- and low-growth coefficients in either horizon; therefore, the findings should be interpreted as a regime-differentiated significance pattern within a nonlinear specification, not as formal proof of coefficient asymmetry. Taken together, these responses are consistent with a one-sided counter-cyclical interpretation of remittances: remittances to GDP decline when domestic growth is above the median, while no significant adjustment is observed during below-median growth episodes. The pattern documented here is therefore driven by the high-growth regime and should not be read as evidence of an active counter-cyclical surge during downturns. Trade openness and ODA exhibit significant positive short-run co-movement with remittances, whereas FDI shows a strong positive long-run association with remittances to GDP. The novelty of this study lies in providing new panel evidence on regime-differentiated remittance–growth associations for CLMV within a nonlinear N-ARDL and dynamic multiplier framework, while transparently reporting that formal Wald tests do not reject equality between high- and low-growth coefficients. Policy implications center on facilitating reliable remittance channels—reducing transfer costs and expanding financial inclusion—without assuming that remittance inflows automatically rise during downturns.
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