Exchange rates, remittances and expenditure of households with foreign-born members: Evidence from Australia

We examine the impact of the depreciation of the Australian dollar (AU$) on the expenditure of households with
foreign-born members (HFBMs) in Australia. Employing a difference-in-differences methodology and using the 2013-
2015 Nielson Homescan Panel Survey data, we find that HFBMs spent more on food in 2014 and 2015 compared to
their native counterparts. We verify our results for food and estimate the impact on total expenditure using the HILDA
survey, a nationally representative panel dataset. We can rule out alternative explanations for our results such as
differences between immigrants and natives in consumption of imports, income growth and price changes. Our
empirical results provide insights on how exchange rate changes may affect immigrants differently than natives.
Our findings are consistent with reduced spending by immigrants both in terms of remittances and in terms of
travelling back to their countries of origin.