Effect of Workers’ Remittances on Inflation in Pakistan
Abstract
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Remittances contribute significantly to the country's capital account. In some cases, the amount of remittances has been greater than Foreign Direct Investments (FDIs) and other forms of economic inflows. Because of their large volumes, remittances are able to influence many macroeconomic variables, in particular the Gross Domestic Product and the balance of international payments. This study examines the dynamics between remittances and inflation in Pakistan with the help of annual data for the period July 2000 to June 2023. The Augmented Dickey-Fuller (ADF) test was used to assess stationarity in the variables. In order to test for cointegration, it uses the Engle-Granger two-step procedure and Johansen's cointegration technique. The findings indicate the long-run association between workers’ remittances and inflation.
Keywords:
Augmented Dickey-Fuller, Foreign Direct Investments, Inflation in Pakistan, Workers’ RemittancesReferences
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