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Relationship between Remittances and Economic Growth in Bangladesh: An Econometric Study

Author

Listed:
  • Kanchan Datta

    () (University of North Bengal)

  • Bimal Sarkar

    (Bangabasi Morning College)

Abstract

In Bangladesh, remittances have increased sharply over the last 20 years and amount since 2008 to over 10 percent of GDP. While remittances can foster growth and development as well as prevent balance of payment crises, they can also have a negative impact on growth if used for conspicuous consumption or unproductively. Recipients of remittance can become highly dependent on the easy money, causing them to reduce their efforts and or their participation in the labor market, which would affect economic growth negatively. In this paper an attempt is made to analyze the impact of remittances on economic growth in the Bangladeshi economy, using time series econometric techniques, specifically, the auto regressive distributed lag (ARDL) framework.

Suggested Citation

  • Kanchan Datta & Bimal Sarkar, 2014. "Relationship between Remittances and Economic Growth in Bangladesh: An Econometric Study," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 19, Bangladesh Development Research Center (BDRC).
  • Handle: RePEc:bnr:wpaper:19
    as

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    File URL: http://www.bangladeshstudies.org/files/WPS_no19.pdf
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    References listed on IDEAS

    as
    1. Pesaran, M. H. & Smith, Ron P., 1998. "Structural Analysis of Cointegrating VARs," Cambridge Working Papers in Economics 9811, Faculty of Economics, University of Cambridge.
    2. Ziesemer Thomas H.W., 2009. "Worker Remittances and Growth: The Physical and Human Capital Channels," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 229(6), pages 743-773, December.
    3. M. Hashem Pesaran & Ron P. Smith, 1998. "Structural Analysis of Cointegrating VARs," Journal of Economic Surveys, Wiley Blackwell, vol. 12(5), pages 471-505, December.
    4. Abu Siddique & E. A. Selvanathan & Saroja Selvanathan, 2011. "Remittances and Economic Growth: Empirical Evidence from Bangladesh, India and Sri Lanka," Journal of Development Studies, Taylor & Francis Journals, vol. 48(8), pages 1045-1062, October.
    5. José Ernesto López-Córdova & Alexandra Olmedo, 2006. "International remittances and development : existing evidence, policies and recommendations," INTAL Working Papers 1290, Inter-American Development Bank, INTAL.
    6. Nicholas P. Glytsos, 2005. "The contribution of remittances to growth: A dynamic approach and empirical analysis," Journal of Economic Studies, Emerald Group Publishing, vol. 32(5), pages 468-496, October.
    7. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    8. Gyan Pradhan & Mukti Upadhyay & Kamal Upadhyaya, 2008. "Remittances and economic growth in developing countries," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(3), pages 497-506.
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    Keywords

    remittances; growth; Bangladesh; ARDL; ECM;

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