Remittances and Real Investment in Jordan: Is There a Link? An Empirical Investigation
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Remittances and Real Investment in Jordan: Is There a Link? An Empirical Investigation
Al-Assaf, Ghazi | Al-Tarawneh, Alaaeddin
Applied Economics Quarterly, Vol. 62 (2016), Iss. 1 : pp. 69–84
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Assistant Professor at Department of Business Economics, The University of Jordan, Amman, Jordan
Assistant Professor at Department of Business Economics, The University of Jordan, Amman, Jordan
Cited By
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Workers’ Remittances and Domestic Investment in South Asia: A Comparative Econometric Inquiry
Abbas, Shujaat
International Migration, Vol. 57 (2019), Iss. 5 P.89
https://doi.org/10.1111/imig.12612 [Citations: 12]
Abstract
The study attempts to test the long-run equilibrium relationships between the flows of workers’ remittances, and real investment. Using Jordanian data, over the period 1976 to 2012, the empirical results provide strong evidence on the presence of a long-run stable investment function. In the short-run, remittances has a positive and significant effect on the real investment; a consistent result with the literature. Therefore, the results confirm the significant impact of worker’s remittances on the real investment found in the previous literatureusing a cointegration technique. Both Engle-Granger and Johansen cointegration tests show that real investment and remittances are cointegrated and there is clear evidence on the presence of a long-run relationship among them in Jordan. This is based on the statistical significance of the coefficient of the error correction term. The estimated coefficient is –0.545 and statistically significant with the anticipated negative sign, which indicates that the speed of adjustment to equilibrium in the long-run is relatively high. This finding emphasises the importance of the flows of remittances to labour-exporting countries on the real investment especially in the case of Jordan.
JEL Classification: F24, E22, C32