From growth regressions to systems of equations

The literature on the effects of aid and remittances as a share of GDP on growth of the GDP per capita has placed much emphasis on growth regressions thereby emphasising only the direct effects on growth. In order to get the total effect one has to capture the indirect ones too and integrate them with the direct effects. To do so we integrate all equations into a dynamic system and run a baseline simulation. We compare several scenarios ??? doubling aid, cutting remittances to half, and stopping net migration ??? to the baseline simulation for all variables.