Are the Direct and Indirect Growth Effects of Remittances Significant?

Rao, B. Bhaskara and Hassan, Gazi (2009): Are the Direct and Indirect Growth Effects of Remittances Significant?

Abstract

Development economists believe that migrant workers’ remittances are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects of remittances and reached different conclusions. In many such studies the growth of output is simply regressed on both remittances and the channels through which remittances affect growth. Thus there is no distinction between the indirect and direct growth effects of remittances and such specifications may give unreliable estimates because of the correlation between the channels and remittances. In this paper we make a distinction between the indirect and direct effects of remittances. Our model is estimated with panel data of 40 high remittance recipient countries and a system GMM panel data estimation method.

• Item Type: MPRA Paper
• Language: English
• Keywords: Remittances, Growth, Panel Data, System GMM
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F22 - International Migration; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies

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