Remittances and economic growth: A study of Guyana

- We explore the effects of remittances on per worker income.
- Effect of aid and financial deepening are also examined.
- Remittances have a positive effect on per worker output both in the short- and long-run.
- Aid has negative effect in the long run and financial deepening no effect.

Using an augmented Solow framework and an ARDL bounds test for cointegration, we explore the short- and long-run effects of remittances, aid and financial deepening on growth in Guyana using annual data for the period 1982-2010. The results show that remittances have a positive and significant effect both in the short and the long run. Aid has a negative effect in the long run and financial deepening is not statistically significant. The Granger-causality test reveals that capital stock, aid and financial deepening cause remittances inflow in Guyana.