Understanding the Drivers of Remittances to Pakistan

David de Padua (), Matteo Lanzafame, Irfan Qureshi () and Kiyoshi Taniguchi ()
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David de Padua: Asian Development Bank
Irfan Qureshi: Asian Development Bank
Kiyoshi Taniguchi: Asian Development Bank

No 733, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Remittances are an important source of external financing in Pakistan, amounting to around 10% of gross domestic product in 2021. As such, an appropriate understanding of the key macroeconomic drivers of remittances has important policy implications. Combining a database of bilateral remittances between Pakistan and its main remittance-sending countries with monthly macroeconomic data over 2003–2021, we use a Bayesian vector autoregression model to understand the drivers of remittances to Pakistan. Specifically, we do so by estimating the impact of various structural shocks on remittance growth in Pakistan. We find that macroeconomic variables, including economic activity, inflation, equity markets, and interest rates—both in Pakistan and migrants’ host countries—play a significant role, and their contributions vary over time.

Keywords: remittances; macroeconomics; Pakistan (search for similar items in EconPapers)
JEL-codes: E70 F22 F24 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2024-07-10
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-mig and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0733

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