Remittances and GDP Dynamics in 11 Developing Countries: Evidence from Panel Cointegration and PMG Techniques
AbstractDespite a plethora of research, the role of remittances on economic growth is yet to be understood. Is there any long run relationship between remittances and GDP? This paper contributes to the literature by answering this question for 11 top remittance-recipient developing countries. These countries are: Bangladesh, Dominican Republic, El Salvador, Gambia, Guatemala, Honduras, Jamaica, Lesotho, Philippines, Senegal and Sri Lanka. Using recently developed econometric techniques, i.e., panel cointegration and pooled mean group (PMG) approach; our results support a positive long run relationship between remittances and GDP. However, the magnitude of the remittance-GDP coefficient is rather quite small. We hypothesize that remittances may be used to increase consumption in these economies. Our results also imply that developing countries should formulate policies to divert this external resource into more productive sectors.
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Bibliographic InfoArticle provided by Department of International Business and Economics from the Academy of Economic Studies Bucharest in its journal Romanian Economic Journal.
Volume (Year): 14 (2011)
Issue (Month): 42 (December)
External resources; economic growth; investment; consumption; long run;
Find related papers by JEL classification:
- F24 - International Economics - - International Factor Movements and International Business - - - Remittances
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
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