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Role of Remittances in Economic Development: An Empirical Study of World’s Two Most Remittances Dependent Pacific Island Economies

Author Info

  • Jayaraman, T. K.
  • Choong, Chee-Keong
  • Kumar, Ronald

Abstract

In the context of the ongoing world-wide recession and the consequent dim prospects for exports from small Pacific island countries, mobilization of foreign exchange earnings assumes considerable importance. The dependency of Samoa and Tonga on inward remittances is well known, as the two Polynesian island countries in recent years have been amongst the first top ten remittance recipient countries of the world. This paper examines the long-run nexus between economic growth and inward remittances during a three-decade period (1981-2008). The paper also discusses some important policy implications arising out of the study findings.

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File URL: http://mpra.ub.uni-muenchen.de/33197/1/MPRA_paper_33197.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 33197.

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Date of creation: May 2011
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Handle: RePEc:pra:mprapa:33197
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Keywords: Remittances; financial sector development; economic growth; bounds test; Samoa; Tonga;

Find related papers by JEL classification:

  • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
  • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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  1. Giuliano, Paola & Ruiz-Arranz, Marta, 2006. "Remittances, Financial Development, and Growth," IZA Discussion Papers 2160, Institute for the Study of Labor (IZA).
  2. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  3. Thorsten Beck & Ross Levine, 2003. "Legal institutions and financial development," Policy Research Working Paper Series 3136, The World Bank.
  4. Dilip Ratha, 2006. "Leveraging remittances for development," Proceedings, Federal Reserve Bank of Dallas, pages 173-185.
  5. Richard P.C. Brown & Gareth Leeves, 2007. "Impacts of International Migration and Remittances," Discussion Papers Series 347, School of Economics, University of Queensland, Australia.
  6. Luintel, Kul B. & Khan, Mosahid, 1999. "A quantitative reassessment of the finance-growth nexus: evidence from a multivariate VAR," Journal of Development Economics, Elsevier, vol. 60(2), pages 381-405, December.
  7. Rao, B. Bhaskara, 2008. "Estimates of the Steady State Growth Rates for Selected Asian Countries with an Extended Solow Model," MPRA Paper 9724, University Library of Munich, Germany, revised 01 Jul 2008.
  8. Kuckulenz, Anja & Buch, Claudia M., 2004. "Worker Remittances and Capital Flows to Developing Countries," ZEW Discussion Papers 04-31, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
  10. Paresh Kumar Narayan, 2005. "The saving and investment nexus for China: evidence from cointegration tests," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1979-1990.
  11. 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.
  12. Mohsen Bahmani-Oskooee & Hafez Rehman, 2005. "Stability of the money demand function in Asian developing countries," Applied Economics, Taylor & Francis Journals, vol. 37(7), pages 773-792.
  13. Jacqueline Irving & Sanket Mohapatra & Dilip Ratha, 2010. "Migrant Remittance Flows : Findings from a Global Survey of Central Banks," World Bank Publications, The World Bank, number 5929, March.
  14. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  15. Michael Gapen & Thomas Cosimano & Ralph Chami, 2006. "Optimal Fiscal and Monetary Policy in the Presence of Remittances," Computing in Economics and Finance 2006 34, Society for Computational Economics.
  16. Michael T. Gapen & Thomas F. Cosimano & Ralph Chami, 2006. "Beware of Emigrants Bearing Gifts; Optimal Fiscal and Monetary Policy in the Presence of Remittances," IMF Working Papers 06/61, International Monetary Fund.
  17. repec:ner:tilbur:urn:nbn:nl:ui:12-3125519 is not listed on IDEAS
  18. repec:cup:cbooks:9780521633659 is not listed on IDEAS
  19. repec:cup:cbooks:9780521633239 is not listed on IDEAS
  20. Narayan, Paresh Kumar & Smyth, Russell, 2005. "The residential demand for electricity in Australia: an application of the bounds testing approach to cointegration," Energy Policy, Elsevier, vol. 33(4), pages 467-474, March.
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