IDEAS home Printed from https://ideas.repec.org/a/eee/ecmode/v28y2011i1-2p701-709.html
   My bibliography  Save this article

A panel data analysis of the growth effects of remittances

Author

Listed:
  • Rao, B. Bhaskara
  • Hassan, Gazi Mainul

Abstract

Many development economists believe that remittances by the migrant workers are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects remittances in the recipient countries but reached different conclusions. This paper analyses the strength of these effects with a common data set with alternative specifications and estimation methods. Our results show that the direct growth effects of remittances are insignificant. However, remittances may have small indirect growth effects.

Suggested Citation

  • Rao, B. Bhaskara & Hassan, Gazi Mainul, 2011. "A panel data analysis of the growth effects of remittances," Economic Modelling, Elsevier, vol. 28(1-2), pages 701-709, January.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:701-709
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264-9993(10)00090-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
    2. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    3. Adams, Richard Jr. & Page, John, 2005. "Do international migration and remittances reduce poverty in developing countries?," World Development, Elsevier, vol. 33(10), pages 1645-1669, October.
    4. Connel Fullenkamp & Mr. Thomas F. Cosimano & Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas, 2008. "Macroeconomic Consequences of Remittances," IMF Occasional Papers 2008/001, International Monetary Fund.
    5. Durlauf, Steven N. & Johnson, Paul A. & Temple, Jonathan R.W., 2005. "Growth Econometrics," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.),Handbook of Economic Growth, edition 1, volume 1, chapter 8, pages 555-677, Elsevier.
    6. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-1151, December.
    7. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    8. Jonathan Temple, 2005. "Dual Economy Models: A Primer For Growth Economists," Manchester School, University of Manchester, vol. 73(4), pages 435-478, July.
    9. Rizwana Siddiqui & A. R. Kemal, 2006. "Remittances, Trade Liberalisation, and Poverty in Pakistan: The Role of Excluded Variables in Poverty Change Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(3), pages 383-415.
    10. Maurice J. G. Bun & Frank Windmeijer, 2010. "The weak instrument problem of the system GMM estimator in dynamic panel data models," Econometrics Journal, Royal Economic Society, vol. 13(1), pages 95-126, February.
    11. Giuliano, Paola & Ruiz-Arranz, Marta, 2009. "Remittances, financial development, and growth," Journal of Development Economics, Elsevier, vol. 90(1), pages 144-152, September.
    12. Acosta, Pablo A. & Lartey, Emmanuel K.K. & Mandelman, Federico S., 2009. "Remittances and the Dutch disease," Journal of International Economics, Elsevier, vol. 79(1), pages 102-116, September.
    13. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    14. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    15. Kocherlakota, Narayana R & Yi, Kei-Mu, 1996. "A Simple Time Series Test of Endogenous vs. Exogenous Growth Models: An Application to the United States," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 126-134, February.
    16. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    17. Edwards, Sebastian, 1998. "Openness, Productivity and Growth: What Do We Really Know?," Economic Journal, Royal Economic Society, vol. 108(447), pages 383-398, March.
    18. Levine, Ross & Renelt, David, 1992. "A Sensitivity Analysis of Cross-Country Growth Regressions," American Economic Review, American Economic Association, vol. 82(4), pages 942-963, September.
    19. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
    20. Philippe Aghion & Steven Durlauf (ed.), 2005. "Handbook of Economic Growth," Handbook of Economic Growth, Elsevier, edition 1, volume 1, number 1.
    21. Lopez, Humberto & Molina, Luis & Bussolo, Maurizio, 2007. "Remittances and the real exchange rate," Policy Research Working Paper Series 4213, The World Bank.
    22. David Dollar & Aart Kraay, 2004. "Trade, Growth, and Poverty," Economic Journal, Royal Economic Society, vol. 114(493), pages 22-49, February.
    23. Emmanuel K. K. Lartey & Federico S. Mandelman & Pablo A. Acosta, 2012. "Remittances, Exchange Rate Regimes and the Dutch Disease: A Panel Data Analysis," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 377-395, May.
    24. Demirguc-Kunt, Asli & Levine, Ross, 2008. "Finance and economic opportunity," Policy Research Working Paper Series 4468, The World Bank.
    25. Mark Rogers, 2003. "A Survey of Economic Growth," The Economic Record, The Economic Society of Australia, vol. 79(244), pages 112-135, March.
    26. James B. Ang, 2008. "A Survey Of Recent Developments In The Literature Of Finance And Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 536-576, July.
    27. Gupta, Sanjeev & Pattillo, Catherine A. & Wagh, Smita, 2009. "Effect of Remittances on Poverty and Financial Development in Sub-Saharan Africa," World Development, Elsevier, vol. 37(1), pages 104-115, January.
    28. Jones, Charles I, 1995. "R&D-Based Models of Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 103(4), pages 759-784, August.
    29. Michael T. Gapen & Mr. Ralph Chami & Mr. Peter J Montiel & Mr. Adolfo Barajas & Connel Fullenkamp, 2009. "Do Workers’ Remittances Promote Economic Growth?," IMF Working Papers 2009/153, International Monetary Fund.
    30. Ryuzo Sato, 1963. "Fiscal Policy in a Neo-Classical Growth Model: An Analysis of Time Required for Equilibrating Adjustment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 30(1), pages 16-23.
    31. Aggarwal, Reena & Demirguc-Kunt, Asli & Martinez Peria, Maria Soledad, 2006. "Do workers'remittances promote financial development ?," Policy Research Working Paper Series 3957, The World Bank.
    32. Amuedo-Dorantes, Catalina & Pozo, Susan, 2004. "Workers' Remittances and the Real Exchange Rate: A Paradox of Gifts," World Development, Elsevier, vol. 32(8), pages 1407-1417, August.
    33. Robert M. Solow, 2000. "Toward a Macroeconomics of the Medium Run," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 151-158, Winter.
    34. Jonathan R. W. Temple, 2005. "Growth and Wage Inequality in a Dual Economy," Bulletin of Economic Research, Wiley Blackwell, vol. 57(2), pages 145-169, April.
    35. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rao, B. Bhaskara & Vadlamannati, Krishna Chaitanya, 2011. "Globalization and growth in the low income African countries with the extreme bounds analysis," Economic Modelling, Elsevier, vol. 28(3), pages 795-805, May.
    2. Moritz Schularick & Solomos Solomou, 2011. "Tariffs and economic growth in the first era of globalization," Journal of Economic Growth, Springer, vol. 16(1), pages 33-70, March.
    3. Carlos Usabiaga & E. Macarena Hernández-Salmerón, 2016. "Regional Growth and Convergence in Spain: Is the Decentralization Model Important?," EcoMod2016 9358, EcoMod.
    4. Baharumshah, Ahmad Zubaidi & Slesman, Ly & Wohar, Mark E., 2016. "Inflation, inflation uncertainty, and economic growth in emerging and developing countries: Panel data evidence," Economic Systems, Elsevier, vol. 40(4), pages 638-657.
    5. Rao, B. Bhaskara & Cooray, Arusha, 2010. "Determinants of the long-run growth rate in the South-Asian countries," MPRA Paper 26493, University Library of Munich, Germany.
    6. B. Bhaskara Rao & Gazi Mainul Hassan, 2012. "Are the Direct and Indirect Growth Effects of Remittances Significant?," The World Economy, Wiley Blackwell, vol. 35(3), pages 351-372, March.
    7. Ouyang, Yusi & Shimeles, Abebe & Thorbecke, Erik, 2019. "Revisiting cross-country poverty convergence in the developing world with a special focus on Sub-Saharan Africa," World Development, Elsevier, vol. 117(C), pages 13-28.
    8. Martin-Mayoral, Fernando & Proaño, Maria Belén, 2012. "Las remesas en América Latina, ¿amenaza u oportunidad? [Remittances in Latin America, a threat or an opportunity?]," MPRA Paper 43730, University Library of Munich, Germany.
    9. Jude Eggoh & Chrysost Bangake & Gervasio Semedo, 2019. "Do remittances spur economic growth? Evidence from developing countries," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 28(4), pages 391-418, May.
    10. William Hauk & Romain Wacziarg, 2009. "A Monte Carlo study of growth regressions," Journal of Economic Growth, Springer, vol. 14(2), pages 103-147, June.
    11. Celine Bonnefond, 2014. "Growth Dynamics And Conditional Convergence Among Chinese Provinces: A Panel Data Investigation Using System Gmm Estimator," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 39(4), pages 1-25, December.
    12. Simplice A. Asongu & Nicholas M. Odhiambo, 2020. "Remittances, the diffusion of information and industrialisation in Africa," Contemporary Social Science, Taylor & Francis Journals, vol. 15(1), pages 98-117, January.
    13. Efobi, Uchenna & Asongu, Simplice & Okafor, Chinelo & Tchamyou, Vanessa & Tanankem, Belmondo, 2019. "Remittances, finance and industrialisation in Africa," Journal of Multinational Financial Management, Elsevier, vol. 49(C), pages 54-66.
    14. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 3, pages 1-72.
    15. Afi Etonam Adetou & Komlan Fiodendji, 2019. "Finance, Institutions, Remittances and Economic growth: New Evidence from a Dynamic Panel Threshold Analysis," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 9(2), pages 1-4.
    16. Simplice Asongu & Nicholas Biekpe & Vanessa Tchamyou, 2019. "Remittances, ICT and doing business in Sub-Saharan Africa," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 35-54, January.
    17. Emmanuel K. K. Lartey, 2017. "Exchange Rate Flexibility and the Effect of Remittances on Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 21(1), pages 103-125, February.
    18. Rao, B. Bhaskara & Tamazian, Artur & Singh, Rup & Vadlamannati, Krishna Chaitanya, 2008. "Financial developments and the rate of growth of output: An alternative approach," MPRA Paper 8605, University Library of Munich, Germany.
    19. Mindaugas Butkus & Janina Seputiene, 2018. "Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance," Economies, MDPI, vol. 6(4), pages 1-27, November.
    20. Lee, Angela Y. & Aaker, Jennifer L., 2006. "A Monte Carlo Study of Growth Regressions," Research Papers 1836r1, Stanford University, Graduate School of Business.

    More about this item

    Keywords

    Remittances Growth Panel data System GMM;

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:701-709. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30411 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.