REMITTANCES AND ECONOMIC GROWTH IN SOUTH AFRICA: APPLYING ARDL BOUNDS TESTING ANALYSIS IN THE PRESENCE OF STRUCTURAL BREAKS

Mduduzi Biyase, Mathias Manguzvane and Thomas Udimal
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Thomas Udimal: Southwest Forestry University

Economics Working Papers from College of Business and Economics, University of Johannesburg, South Africa

Abstract: We take another look at the relationship between remittances and economic growth in South Africa, using recent data and a fairly lengthy time period of approximately 50 years for South Africa running from 1970 to 2019. We use the autoregressive distributed lag (ARDL) bounds testing approach to assess the cointegration among remittances, economic growth, including control variables in the presence of structural breaks. We find evidence to suggest that the structural change in economic growth occurred in 2008 during the global financial crisis, while the break point for remittances received emerged in 1997. After taking into consideration the presence of structural breaks, our study confirmed a cointegration relationship between remittances received and economic growth in South Africa. Specifically, the ARDL results present a negative and significant estimates of remittances on economic growth in the short and long-run, consistent with previous studies. All the specification tests confirm the statistical robustness of the ARDL bounds testing method.

Keywords: ARDL; economic growth; remittances; WDI (search for similar items in EconPapers)
JEL-codes: C32 F24 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2022, Revised 2022
New Economics Papers: this item is included in nep-fdg, nep-gro and nep-pay
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