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
Date Written: March 5, 2014
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: Suggested Citation