Economists argue that the money supply positively impact on economic growth of nations. In Sri Lankan context this statement was not tested econometrically. Therefore, the aim of this study was to scrutinize the impact of money supply on Sri Lankan economy. To exam this objective, this study considered the time series data from the period of 1959 to 2013 and used two types of variables such as dependent and independent variables. Here, the gross domestic product was considered as dependent variable, and Money supply, Exchange rate, Exports earnings, Imports outflow, the Colombo consumer price index were deemed as independent variables. In the meantime, the multivariate econometric method was used to test the impacts of money supply on economic growth of Sri Lanka. According to the analytical results, the money supply has kept positive impact on the economic growth of Sri Lanka at 1% significant level. The R-squared of the estimated model was 92% which was indicated that the estimated model was desirable. Meanwhile, the Durbin Watson test statistic was 2.43 and also the Breusch –Godfrey serial correlation LM test results was greater than 5%. Therefore, these statistics indicated that, the estimated model was not suffering from serial correlation.

PurposeThe objective of this study is to examine the long-run relationship between workers' remittances and economic growth in Sri Lanka using time series data spanning 1975–2021.Design/methodology/approachThis study employed both exploratory data analysis (EDA) and inferential data analysis (IDA) tools. EDA includes the scatter plots, confidence ellipse with Kernel fit, whereas IDA covers unit root test, the autoregressive distributed lag (ARDL) bounds technique, the Granger's causality test, and impulse response function (IRF) analysis.FindingsEDA confirms that workers' remittances have a positive relationship with per-capita gross domestic product (GDP). All variables used in this study are I(1). This study is exhibited that workers' remittances have a positive long-run relationship with per-capita GDP. The estimated coefficient of the error correction term shows that the dependent variable moves towards the long-run equilibrium path. Workers' remittances have a short-run and long-run causal relationship with per-capita GDP. The IRF analysis indicates that a one standard deviation shock to workers' remittances has initially an immediate significant positive impact on economic growth.Practical implicationsThis study provides insights into workers' remittances in economic growth in Sri Lanka. Further, the findings of this study also provide evidence that workers' remittances increase economic growth.Originality/valueUsing ARDL bounds test, Granger's Causality test and IRF analysis for examining the relationship between workers' remittances and economic growth are the originality of this study.

PurposeThe objective of this study is to examine the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka over the period of 1975–2017 using the annual time series data.Design/methodology/approachTo test the order of integration of the variables used in this study, the augmented Dickey–Fuller (ADF) and Phillips and Perron (PP) unit root tests were employed. The autoregressive distributed lag (ARDL) bounds cointegration technique was used to examine the long-run relationship between the variables. The Granger causality test was used to examine the causal relationship between the variables.FindingsThe unit root tests confirm that the variables are stationary at 1st difference I(1). Meanwhile, the ARDL test results show that workers' remittances have a positive long-run relationship with consumption expenditure in Sri Lanka. The coefficient of the error correction term indicates that 9.3% of disequilibrium error is adjusted each year and the response variable of the consumption expenditure moves towards the long-run equilibrium path. Further, the results of the Granger causality test indicate that workers' remittances Granger cause consumption expenditure in the short-run.Practical implicationsThe findings have some important policy implications for the design of efficient policy related to workers' remittances and consumption expenditure pattern, the knowledge of which will help promote the macroeconomic stability and welfare of people in Sri Lanka.Originality/valueThis study contributes to the existing literature by using newly developed ARDL bounds cointegration techniques to investigate the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka. Furthermore, to our knowledge, this study is the first research in examining the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka.

PurposeThis study investigates the long-run relationship between workers' remittances and human capital formation in Sri Lanka by using the macro-level time series data during the period of 1975–2020.Design/methodology/approachIn this study, the augmented Dickey–Fuller (ADF) and Philips–Perron (PP) unit root tests, the autoregressive distributed lag (ARDL) bounds cointegration technique, the Granger causality test, the forecast error variance decomposition technique and impulse response function analysis were employed as the analytical techniques.FindingsIn accordance with the results of unit root tests, the variables used in this study are mixed order. Results of cointegration confirm that workers' remittances in Sri Lanka have both long-run and short-run beneficial relationship with human capital formation. The Granger causality test results indicate that there is a two-way causal relationship between workers' remittances and human capital formation. The results of forecast error variance decomposition expose that innovation of workers' remittances contributes to the forecast error variance in human capital in bell shape. Further, the empirical evidence of impulse response function analysis reveals that a positive standard deviation shock to workers' remittances has an immediate significant positive impact on human capital formation in Sri Lanka for a period of up to ten years.Practical implicationsThis research provides insights into the workers' remittances in human capital formation in Sri Lanka. The findings of this study provides evidence that workers' remittances help to produce human capital formation.Originality/valueBy using the ARDL Bounds cointegration and other techniques in Sri Lanka, this study fills an important gap in academic literature.

There is a relationship between the fiscal deficit and inflation, which was confirmed empirically in several studies conducted in many countries. Sri Lanka has been encountering the problem of inflation for the recent years.