The impact of remittances on economic growth in Ghana: An ARDL bound test approach

Figures & data

Figure 1. 10 top remittance receiving countries in Sub-Saharan Africa.

Source: World Bank (2022)

Table 1. Summary statistic of Variables

Variables	Obs	Mean	Std. Dev.	Min	Max
GDP	30	5.374	2.553	0.514	14.047
INF	30	19.115	12.937	4.865	59.462
POPGROTH	30	2.478	0.205	2.131	2.896
FDI	30	4.040	2.738	0.303	9.467
REMIT	30	2.184	2.665	0.094	10.085
UNEMPT	30	6.202	1.778	3.490	10.460
ODA	30	7.208	4.145	1.333	15.977
GOVEXP	30	10.136	2.424	6.957	15.308
TRADE	30	75.110	18.959	38.517	116.048

Source: Author’s construct, 2022.

Figure 2. Trend graph of Gross Domestic Product and received remittances as % of GDP.

Source: Author’s construct, 2022.

Table 2. Unit root test result (ADF)

	Level Form		First differenced
	ADF		ADF
Variable	Intercept	Prob.	Intercept	Prob.
UNEMPT	−2.3272	0.1709	−2.6774	0.0909*
REMIT	−0.5619	0.8647	−5.9297	0.0000***
FDI	−1.8001	0.3733	−4.4677	0.0014***
REMIT_UNEMPT	−2.1726	0.2199	−3.9371	0.0053***
INFLATION	−3.4768	0.0159**	−6.1514	0.0000***
TRADE	−2.0974	0.2470	−5.0768	0.0003***
POP GROWTH	1.3498	0.9981	−3.8594	0.0079***
ODA	−1.3267	0.6039	−6.2099	0.0000***
GDP	−3.1622	0.0325**	−6.1796	0.0000***
GOVCON	−2.5885	0.1064	−5.9979	0.0000***

Note: *, ** and *** denotes significance at 10%, 5% and 1% levels respectively.

Source: Author’s construct, 2022.

Table 3. Bound test results

F-bounds Test
H0 : No levels relationship
Test Statistic	Value	Sig	I(0)	I(1)
F-Stat	13.01542	10%	1.95	3.06
K	8	5%	2.22	3.39
		2.50%	2.48	3.7
		1%	2.79	4.1

Source: Author’s construct, 2022.

Table 4. Long-run effect of Remittance on GDP

Levels Equation Model: ARDL (1, 0, 2, 2, 1, 2, 1, 2, 1)
Case 3: No trend with unrestricted Constant
Variable	Coefficient	Std. Error	Prob.
UNEMPT	14.8458	2.3739	0.0002
REMIT	8.2658	1.3148	0.0002
FDI	0.9602	0.1605	0.0003
REMIT_UNEMPT	−0.8389	0.1232	0.0001
INFLATION	0.1234	0.0395	0.0140
TRADE	0.1401	0.0231	0.0003
POP GROWTH	41.3032	5.8419	0.0001
ODA	0.3660	0.1654	0.0579

Source: Author’s construct, 2022.

Table 5. Short Run Remittance impact on GDP growth

ARDL Error Correction Regression Model: ARDL (1, 0, 2, 2, 1, 2, 1, 2, 1)
Case 3: No Trend with unrestricted Constant
Variable	Coefficient	Std. Error	Prob.
C	−422.0628	27.4956	0.0000
D(REMIT)	9.8995	0.5338	0.0000
D(REMIT(−1))	−1.2245	0.2250	0.0006
D(FDI)	0.9322	0.0999	0.0000
D(FDI(−1))	−1.1445	0.1461	0.0001
D(REMIT_UNEMPT)	−1.1551	0.0678	0.0000
D(INFLATION)	0.0323	0.0102	0.0131
D(INFLATION(−1))	−0.1179	0.0110	0.0000
D(TRADE)	0.0274	0.0097	0.0229
D(POPT GROWTH)	162.7227	14.1843	0.0000
D(POP GROWTH(−1))	−80.8459	9.7635	0.0000
D(ODA)	0.8072	0.0996	0.0000
CointEq(−1)*	−1.5830	0.1034	0.0000
R-squared	0.9736
S.E. of regression	0.5909
Log likelihood	−17.2696
Schwarz criterion	2.7005
F-statistic	49.1537
Prob(F-statistic)	0.0000

Source: Estimation from data, 2022.

Table 6. Results of Residual and Stability Tests

Method	F-Statistic	Prob
Serial correlation	25.76395	Prob. F(2,6) = 0.0011
Heteroscedasticity	1.187268	Prob. F(20,8) = 0.4225
Normality (Jarque-Bera)	1.345	0.5104, Normal

Source: Author’s construct, 2022.

Figure A1. CUSUM and CUSUMSQ test results for the model.

Table A1. Variables and their Measurements

Variable	Definition	Measurement
GDP	Gross Domestic Product	Annual percentage growth rate of GDP at market prices
POP GROWTH	Population growth rate	Annual Population growth rate (%)
FDI	Foreign Direct Investment	Foreign Direct Investment to GDP
REMIT	Remittances received	International migrants’ remittances received to GDP
ODA	Official Development Assistance received	Net Official Development assistance received to GDP
UNEMPT	Unemployment rate	Unemployment, total (% of total labor force)
INFLATION	Inflation rate	Inflation as measured by the consumer price index
TRADE	Trade (Openness of the economy)	Import plus export (% of GDP)

Source: Author’s own construct, 2022.

World Bank. (2022) . World Development Indicators. The World Bank group.

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