Author:   Nurlan Atabaev, Gulnaz Atabaeva, Nargiza Alymkulova
Publisher:   GRFDT
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In many developing countries, remittance payments from migrant workers have become an increasingly important source of foreign income. Empirical studies that implemented for various countries reveal workers’ remittances may have positive, negative or neutral effect on economic growth. This paper investigates the causal link between remittances and economic growth in Kyrgyzstan, by employing the Granger causality test under a VAR framework (Granger 1988). Using time series data over a 20 year period, we found that growth in remittances does lead to economic growth but economic growth does not cause remittance in Kyrgyzstan. The paper also investigates the impact of remittances on key macroeconomic variables such as GDP, consumption, government spending, investment, imports and exports in Kyrgyzstan, by using data belong to 1994-2013 period. The time series regression findings indicate that impact of remittances on consumption, imports and GDP are all positive while that on investment is negative.

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