Remittances and GDP Dynamics in 11 Developing Countries: Evidence from Panel Cointegration and PMG Techniques

Anupam Das () and Murshed Chowdhury
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Anupam Das: Department of Policy Studies, Mount Royal University

Romanian Economic Journal, 2011, vol. 14, issue 42, 3-23

Abstract: Despite a plethora of research, the role of remittances on economic growth is yet to be understood. Is there any long run relationship between remittances and GDP? This paper contributes to the literature by answering this question for 11 top remittance-recipient developing countries. These countries are: Bangladesh, Dominican Republic, El Salvador, Gambia, Guatemala, Honduras, Jamaica, Lesotho, Philippines, Senegal and Sri Lanka. Using recently developed econometric techniques, i.e., panel cointegration and pooled mean group (PMG) approach; our results support a positive long run relationship between remittances and GDP. However, the magnitude of the remittance-GDP coefficient is rather quite small. We hypothesize that remittances may be used to increase consumption in these economies. Our results also imply that developing countries should formulate policies to divert this external resource into more productive sectors.

Keywords: External resources; economic growth; investment; consumption; long run (search for similar items in EconPapers)
JEL-codes: C33 F24 F43 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:rej:journl:v:14:y:2011:i:42:p:3-23

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