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Abstract

This paper examines the effect of international remittances on the Philippine economy, both in the short run and in the long run, using a standard cointegration method. Results of the analysis show that remittances have a positive significant effect on the Philippine economy in the long run. This translates to a 0.018% increase in the economy’s gross domestic product when the remittances sent by overseas workers to the Philippines increases by 1%. However in the short run, remittances negatively affect the economy’s output, which implies that an increase in remittances sent to the country is associated with a decline in the economy’s output.

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