Output Growth Volatility and Remittances: The Case of ECOWAS

Deekor Leelee Nwibari,Gbanador Clever A

doi:10.5296/ijssr.v6i2.12647

Abstract

The study on output growth volatility and remittances: the case of ECOWAS is to determine the impact of remittances on output growth volatility. To achieve this, the study adopts the theory of altruism which posits that the migrant derives a positive utility from the well-being of the family left behind. A panel annual data set covering 15 remittances recipient ECOWAS member nations for the period ranging from 1995 to 2015 were utilized. The study utilizes a panel system Generalized Method of Moments (GMM) technique and both the static and dynamic panel estimation approaches to examine the impact of remittances on growth volatility. Results show that remittances appear to be inducing output volatility in ECOWAS member countries. As a result, the study suggests among others, the encouragement of policies that will foster increasing influx of remittances to the region by the concern authorities in order to stabilize volatility of any form in the region.

Highlights

Economic growth and development processes in the world are affected by migration of people
The results shown in column 3 of Table 2 imply that manage variables like lagged of output growth volatility, capital flow, government consumption, inflation and trade openness appear with the correct sign and are consistent with theory
In order to ascertain or refute the popular assertion that remittance influx is altruistic in nature and as such reduces output growth volatility

Summary

Introduction

Economic growth and development processes in the world are affected by migration of people. Remittances can spur on financial growth through channels such as facilitating the economic market development, serving as a source of finance for entrepreneurial activities, insurance or coverage against shocks, financing household expenditure, financing of family capital formation, bridging financial savings hole and the external gap of financing. This has been empirically proven by a section of literature that has documented the positive gains of remittances for the recipient households. It is possible that remittances affect economic fluctuations or output volatility, but in contrast to a considerable range of literatures that have discussed the effect of remittances on development and growth in developing nations, the impact of remittances on output growth fluctuation is almost negligible

Methods

Findings

Discussion

Conclusion