Remittance inflows and economic growth in Indonesia An Autoregressive Distributed Lag Model (ARDL)
European Journal of Molecular & Clinical Medicine,
2020, Volume 7, Issue 11, Pages 4564-4583
Abstract
This research investigated the long-run influence of remittance inflows on economic growth in Indonesia. Indonesia, one of several world's top receiving countries, also drawn consideration regarding the link between remittance and economic growth in recent years. In 2018, remittances added to 1.8% of Indonesia’s GDP, with a share of 0.78 percent in 2011. The general objective of this work is to examine the impact of remittance inflows on economic growth over the period 1983 to 2018. The researcher has settled an Autoregressive Distributed Lag framework or dynamic regression analysis that is widely used to evaluate the relation between remittances and economic growth in the nation. After evaluating the root characteristics of the time series figures, all variables have been identified stationary at the first difference point under the ADF stationary test. The research conducted diagnostic tests such as the residual normality test, Heteroscedasticity, and serial autocorrelation tests for misspecification in order to confirm the estimated parameter outcomes obtained by the estimated model. A stability test for the model is also regulated mostly by the CUSUM test. The ARDL model demonstrates that there is a statistically meaningful long - term positive correlation between remittance inflows and the economic growth of Indonesia's gross domestic product. Although the money supply is significant in 5%, however, it is negatively correlated with economic growth.
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