Do Workers’ Remittances Cushion Economic Growth in Sri Lanka?
Harsha Paranavithana

Abstract
International migration and large workers’ remittance inflows have been prominent features of the Sri Lankan economy for many decades. Incorporating workers’ remittances among other variables into a growth model, and employing time series annual data over the 1977-2012 period, this study investigates the impact of workers’ remittances on economic growth in Sri Lanka. The empirical evidences based on the vector error correction model indicate a positive direct as well as indirect relationship between workers’ remittances and economic growth in the long-term. However, the Wald test results demonstrate that there is no short-run causality between workers’ remittances and economic growth, either directly or indirectly.

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