The Remittances-Output Nexus: Empirical Evidence from Egypt

Table 1

Unit root tests of remittance and GDP.

	Stationarity tests in levels				Stationarity tests in first difference
	Output		Remittances		Output		Remittances
	ADF	KPSS	ADF	KPSS	ADF	KPSS	ADF	KPSS
Intercept	−1.80	0.70**	−1.74	0.15	−4.17***	0.23	−6.01***	0.18
Trend and intercept	−3.03	0.11	−1.80	0.11	−4.38***	0.11	−6.05***	0.17
No trend and intercept	14.57		1.15		−1.50*		−6.01***

∗,∗∗,∗∗∗indicate rejection of the null hypothesis at 10%, 5%, and 1% levels of significance, respectively. For the ADF test, the hypotheses of interest are 𝐻₀: series has a unit root versus 𝐻₁: series is stationary. The ADF augments the test using 𝑝 lags of the dependent variable to ensure that the error terms of the test are not autocorrelated. The Schwarz Bayesian information criterion (SBIC) is used to determine the optimal lag length of the ADF test. For the KPSS test, the hypotheses of interest are 𝐻₀: series is stationary versus 𝐻₁: series has a unit root.