Macroeconomic Impact of Remittances on Output Growth: Evidence from Turkey
This paper uses a Keynesian macro-econometric model to examine the impact of remittances on variables such as consumption, investment, imports and income in Turkey.
The paper traces the development of remittances over the years in Turkey. It estimates the short-term and long-term marginal propensity to consume (MPC) and marginal propensity to import (MPI), and evaluates impact of change in remittances on macroeconomic variables. It uses these results to evaluate the impact of remittances on growth rates of output.
The paper states that remittances have been a positive factor in the economic growth of turkey. Findings include:
- MPC and MPC are comparable to those of other countries;
- Impact of remittances on consumption, investment, imports and income are positive;
- Impact multiplier for income shows substantial increase in income due to remittances;
- Highest remittances induced output growth occurred in the early 1970’s.