Growth Effects of Remittances:Is there a U-Shaped Relationship?

Gazi Hassan () and Mohammed S. Bhuyan ()
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Mohammed S. Bhuyan: University of Wollongong

Working Papers in Economics from University of Waikato

Abstract: This paper shows that the effect of remittances on economic growth entails a U-shaped pattern where it is negative in the beginning but becomes positive later on. The analysis is based on the argument that recipient household savings out of remittances income is negligible or even negative in the initial periods but turns positive in the later part. Using time series data from Bangladesh and single-equation cointegration methods, we find that remittances’ effect on long-run growth is negative and falling until remittances-to-GDP ratio is roughly 9 percent and it starts to become positive when the ratio exceeds 17 percent.

Keywords: remittances and growth; remittances utilisation; total factor productivity (TFP); cointegration; Bangladesh (search for similar items in EconPapers)
JEL-codes: F22 F24 O10 O15 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2013-11-15
New Economics Papers: this item is included in nep-eff and nep-fdg
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