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Lead-lag relationship between remittance and growth: ARDL approach

Robbana, Aroua and Masih, Mansur (2018): Lead-lag relationship between remittance and growth: ARDL approach.

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Abstract

The paper seeks to investigate the lead-lag relationship between remittance and growth for Tunisia. The analysis is based on the autoregressive distributed lag (ARDL) approach to cointegration proposed by (Pesaran, Shin, & Smith, 2001) which has the advantage to provide estimates with desirable properties and to make reliable conclusions. The results indicate cointegrated relationships among the variables. The findings confirm that the Tunisian economic growth, the unemployment and inflation have long term theoretical relationship with remittances. The variance decompositions (VDC) analysis tends to indicate that remittances are driven by economic growth and not the other way around. These results suggest policymakers to significantly take advantage of this lead-lag relationship in order to ensure more remittance inflows into the country.

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