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Worker Remittances In Growth Regressions: The Problem Of Collinearity

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  • Thomas H.W. ZIESEMER

Abstract

The sign of worker remittances in growth regressions is heavily disputed in the literature. Comparing two growth regressions with different signs for the remittance variable we show that collinearity with the lagged dependent variable might indicate that collinearity should be investigated comprehensively and might lead to a change in specifications, which differ in the variance inflation factors (VIF). In our case the variance inflation factor for remittances depends on the use of a five or one-year lag of the lagged dependent. In the regression with a VIF below ten, the standard critical value, the sign of remittances is positive.

Suggested Citation

  • Thomas H.W. ZIESEMER, 2010. "Worker Remittances In Growth Regressions: The Problem Of Collinearity," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 10(2).
    • Handle: RePEc:eaa:aeinde:v:10:y:2010:i:2_1
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    1. Christine Mutz & Thomas Ziesemer, 2008. "Simultaneous estimation of income and price elasticities of export demand, scale economies and total factor productivity growth for Brazil," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2921-2937.
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    Cited by:

    1. Omneia HELMY & Chahir ZAKI & Aliaa ABDALLAH, 2020. "Do Workers’ Remittances Promote Consumption Stability In Egypt?," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 20(2), pages 127-144.
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    4. BORJA, Karla, 2013. "Home And Host Country Business Cycles And Remittances: The Case Of El Salvador And The Dominican Republic," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(2), pages 101-118.

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    More about this item

    Keywords

    Growth; remittances;

    JEL classification:

    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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