Abstract
<p>Remittance has become one of the main sources of foreign income and animportant part of the Nepalese economy. It plays a significant role in reducing poverty,increasing household income, and maintaining foreign exchange reserves. The studyentitled “MACROECONOMIC RELATIONSHIP OF REMITTANCE INFLOW ANDOUTFLOW IN NEPAL EMPIRICAL EVIDENCE USING ARDL AND XG BOOST”has been carried out to examine the relationship of selected macroeconomic variableswith remittance inflow and outflow.The main objective of this study is to examine the relationship ofmacroeconomic indicators real GDP, consumption, investment, and inflation onremittance inflow and outflow while specific objectives include to analyze the trendand pattern of remittance inflow and outflow, and to identify the relationship betweenremittance and major events.This study is based on secondary data covering the period from 1993 to 2023.Data have been collected from various authentic sources such as Nepal Rastra Bank,National Statistics Office, and World Bank database. The study has employed bothdescriptive, econometric and machine learning method. The Autoregressive DistributedLag (ARDL) model has been used to estimate relationship between remittance andeconomic variables. While, a XG BOOST machine learning model has been appliedand run to test variable importance.The findings show that remittance inflow has a positive and significant relationon household consumption and Real GDP. Remittance outflow, though relativelysmaller, has increased gradually in past few years and shows an association with theinflation rate. The overall result indicates that remittance inflow supports economicgrowth. While, remittance outflow has a mild effect on the economy of the country.Overall, the results of ARDL and XG BOOST find similar result. For remittance inflowboth models show the importance of consumption, where for remittance outflow bothmodels show the importance of inflation rate.</p>