Causal Relationship between Worker's Remittances and Imports in Pakistan

European Journal of Scientific Research 120 (1): 177-188, March 2014; ISSN: 1450-216X/1450-202X

12 Pages Posted: 16 Apr 2014

See all articles by Rizwan Ahmed

Rizwan Ahmed

Indus University

Parmar Vishnu

University of Sindh

Nawaz Ahmad

RTS (Research, Trainings, and Solutions); Institute of Business Management (IoBM)

Date Written: March 5, 2014

Abstract

This paper is an effort to examine the association between remittances and imports. The anticipated import function shows that worker’s remittances play a substantial role in the determination of imports in the economy. In this study the researchers used different econometric techniques in order to measure the short-term and long-term relationship between worker’s remittances and imports. The ARIMA, Johansen Cointegration test is used to determine the existence of a long-term relationship between the variables of the study. The results showed that the Normalized cointegrating coefficients are statistically significant and showed a stable and positive relationship between the two variables of the study. The analysis of Granger causality indicates the existence of a unidirectional causality from import to worker’s remittances. This confirms that worker’s remittances have no significant impact on the demand for imported goods rather imports have a positive impact on the worker’s remittances of Pakistan.

Keywords: Worker’s remittance, Import, ARIMA, Johansen Cointegration, Granger Causality, Unidirectional Causality

JEL Classification: C12, C32, F41

Suggested Citation

Raheem, Ahmed and Vishnu, Parmar and Ahmad, Nawaz, Causal Relationship between Worker's Remittances and Imports in Pakistan (March 5, 2014). European Journal of Scientific Research 120 (1): 177-188, March 2014; ISSN: 1450-216X/1450-202X. Available at SSRN: https://ssrn.com/abstract=2424792

Ahmed Raheem

Indus University ( email )

ST-2D, Block 17, Gulshan-e-Iqbal
Gulshan-e-Iqbal
Karachi, Sindh 75300
Pakistan

Parmar Vishnu

University of Sindh ( email )

Jamshoro, Sindh
Pakistan

Nawaz Ahmad (Contact Author)

RTS (Research, Trainings, and Solutions) ( email )

9th Nishat Lane, DHA 6
9th Nishat Lane, DHA 6
Karachi, Sindh 75500
Pakistan
00923009292422 (Phone)

Institute of Business Management (IoBM) ( email )

Plot # 84
Korangi Creek
Karachi, Sindh 75190
Pakistan

HOME PAGE: http://www.faculty.iobm.edu.pk/staff/nawaz-ahmad/

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