The Relationship between Remittances and Economic Growth in Togo: A Vector Equilibrium Correction Mechanism

Farhana Ahmed and Md Mahbubul Hakim

This paper investigates the relationship between remittances and economic growth in Togo. Using time series data over a period of 42 years (1974-2015) for Togo, we apply Johansen cointegration test methods, followed by three-step vector equilibrium correction mechanism (VECM) for long-run causality and Wald test for short-run causality along with pairwise-Granger causality test. Our result confirms a long-run bi- directional Granger causality exists between remittances and economic growth in Togo. However, no short-run causal relationship exist between remittances and economic growth. The paper also discusses policy issues that comes up from the consequences of the analysis. The results of this study would help the government and policy makers to take appropriate domestic policies in the area of migration and remittances for Togo.

DOI : https://doi.org/10.21102/gefj.2017.03.101.01