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The Remittance-GDP Relationship in the Liberalized Regime of Bangladesh: Cointegration and Innovation Accounting

Author

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  • Biru Paksha PAUL

    (State University of New York)

  • Anupam DAS

    (Mount Royal University)

Abstract

Bangladesh, being one of the top remittance-recipient countries in the world, has drawn attention to the remittance-output relationship in recent years. The results on this aspect are nevertheless inconclusive. Working on a relatively liberalized regime from 1979 to 2009, this study finds a long run positive relationship between remittances and GDP in Bangladesh. The adjustment of this relation, however, goes against traditional belief in that GDP does not respond to the movements in remittances while correcting disequilibrium after a shock in the system, but the reverse is true. There is no evidence on remittance-led growth in the short run. Innovation accounting shows that the impact of output on remittances is remarkably stronger than that of remittances on output. These findings have policy implications for other emerging nations in that GDP growth is capable of attracting further remittances arguably through increasing investment demand and initiating institutional reforms in the economy.

Suggested Citation

  • Biru Paksha PAUL & Anupam DAS, 2011. "The Remittance-GDP Relationship in the Liberalized Regime of Bangladesh: Cointegration and Innovation Accounting," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(9(562)), pages 41-60, September.
  • Handle: RePEc:agr:journl:v:9(562):y:2011:i:9(562):p:41-60
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    Cited by:

    1. Syed Zeeshan Zafar & Muhammad Siddique & Haroon Ahmad & Tahir Ahmad Khan, 2016. "The Economic Implications of Remittances on Economic Growth: The Case Study of Pakistan," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(7), pages 215-222, July.

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