Can Migration Fear and Policy Uncertainty Be the Source of Macroeconomic Fluctuations?

Abstract

There is no doubt that migration is a complex phenomenon with varied economic, political, and cultural impacts on both the countries of origin as well as the countries of destination. In particular, migration fears and policy uncertainties may have positive or negative consequences on economic activities such as the labor market, price stability, and economic activity in economies either directly or indirectly. For this reason, this study analyzes the causality effect of migration fear and policy uncertainty indices on macroeconomic variables in the most immigrant-receiving countries, the US, the UK, France, and Germany, using both panel and time-varying causality tests. In the study, no causality relationship was found from migration fear and policy uncertainty indices to macroeconomic variables in panel data. However, country-specific time-varying causality relationships were detected in the time series dimension. According to the findings, it can be stated that policymakers and researchers should consider migration fear and policy uncertainty when determining policies to ensure macroeconomic stability in these countries.

Keywords

• migration fear index
• migration policy uncertainty index
• panel data
• time-varying causality