Workers' remittances and economic growth: new evidence from an ARDL bounds cointegration approach for Sri Lanka
Journal of Economic and Administrative Sciences
ISSN: 1026-4116
Article publication date: 1 March 2023
Abstract
Purpose
The objective of this study is to examine the long-run relationship between workers' remittances and economic growth in Sri Lanka using time series data spanning 1975–2021.
Design/methodology/approach
This study employed both exploratory data analysis (EDA) and inferential data analysis (IDA) tools. EDA includes the scatter plots, confidence ellipse with Kernel fit, whereas IDA covers unit root test, the autoregressive distributed lag (ARDL) bounds technique, the Granger's causality test, and impulse response function (IRF) analysis.
Findings
EDA confirms that workers' remittances have a positive relationship with per-capita gross domestic product (GDP). All variables used in this study are I(1). This study is exhibited that workers' remittances have a positive long-run relationship with per-capita GDP. The estimated coefficient of the error correction term shows that the dependent variable moves towards the long-run equilibrium path. Workers' remittances have a short-run and long-run causal relationship with per-capita GDP. The IRF analysis indicates that a one standard deviation shock to workers' remittances has initially an immediate significant positive impact on economic growth.
Practical implications
This study provides insights into workers' remittances in economic growth in Sri Lanka. Further, the findings of this study also provide evidence that workers' remittances increase economic growth.
Originality/value
Using ARDL bounds test, Granger's Causality test and IRF analysis for examining the relationship between workers' remittances and economic growth are the originality of this study.
Keywords
Acknowledgements
The authors thank the editor of this journal, namely Professor Rebecca Abraham, Associate Professor Ghulam A. Arain for accepting this manuscript, anonymous reviewers for providing the valuable comments and Prof. S. Sivarajasinham for encouraging to construct this manuscript. Further, the authors declare that they have not received any fund facilities from anywhere to publish this article.
Citation
Mohamed Aslam, A.L. and Alibuhtto, M.C. (2023), "Workers' remittances and economic growth: new evidence from an ARDL bounds cointegration approach for Sri Lanka", Journal of Economic and Administrative Sciences, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JEAS-05-2022-0132
Publisher
:Emerald Publishing Limited
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