The Empirical Linkage Between Remittances And Economic Growthan ARDL Co-Integration Approach For India
Journal Title: International Journal of Business and Management Invention - Year 2018, Vol 7, Issue 12
Abstract
The purpose of this paper is to investigate the empirical relationship between remittances and economic growth by highlighting short run and long-run dynamics forIndian economy.The paper uses secondary time series data over the period 1977-2016.AugmentedDickey-Fullerand Phillips Perron unit root tests are applied to figure out the order of integration. The study employed Autoregressive Distributive Lag (ARDL) approach generally known as Bound testing technique.ARDL technique is more efficient for small and finite sample studies. Error Correction Model (ECM) has also been utilized to provide us information about the impact of a causal factor on the variable under study. Further, in order to check the model stability, CUSUM and CUSUMQ tests are also used. Sensitivity analysis is conducted to check the robustness of the results.Theresearch paper establishes an empirical relationship between remittances and economic growth for the Indian economy. The findings reveal the existence of a significant positive relationship between economic growth and remittances in the long run while the results are insignificant in case of a short run. However, the model is found to be stable.The paper proves empirically the linkage between remittances and economic growth in the long run by bridging the gap between theory and practice. Indian policymakers can consider the model to formulate pertinent policies by transforming the potential of these efficient financial resources into real economic growth.
Authors and Affiliations
Suman Bindu, P. Sridharan
Keywords
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