Abstract

In this paper we investigate the role of remittances in economic performance of Turkey. Our study is motivated by controversial findings of the previous two studies that already addressed this important issue. Karagoz (2009) finds out that remittance flows negatively influenced Turkeys’ economic performance, whereas Tansel and Yasar (2010) report the opposite result. We use the econometric technique for testing Granger causality suggested in Toda and Yamamoto (1995). Reconciling the findings of these two studies, we find no statistical evidence that remittances Granger cause output in Turkey. In turn, we also could not reject the null hypothesis that remittances are not Granger caused by GDP.

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