Workers’ Remittances, Resident FCAs and Kerb Premium: a Cointegration Analysis

Zulfiqar Hyder ()

No 3, SBP Working Paper Series from State Bank of Pakistan, Research Department

Abstract: This paper employs Johansen’s model selection and maximum likelihood cointegration technique to analyze the relationship among workers’ remittances, kerb premium and resident FCAs for Pakistan during July 1993 to December 2001. The results suggest that these variables are cointegrated from July 1993 to April 1998. However, the relationship was jolted by the two-tier exchange rate regime, freezing of FCAs and subsequent tightening of foreign exchange regulations following the nuclear tests. In addition, the causal relationship is found to flow (i) from kerb premium to remittances from the Gulf and (ii) from remittances to resident FCAs prior to nuclear tests. After that, the causal relationships reverse for the Gulf and other region. The results also indicate that higher kerb premium has a detrimental effect on remittances. The findings of this paper have implications for the future economic reforms particularly in the area of the monetary, trade, exchange and payments reforms in Pakistan with special emphasis on enhancing remittances from expatriate Pakistanis.

Keywords: Workers' remittances; cointegration; exchange rate (search for similar items in EconPapers)
JEL-codes: C22 F24 F31 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2003-04
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sbp.org.pk/repec/sbp/wpaper/wp03.pdf First version, 2003 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbp.org.pk/repec/sbp/wpaper/wp03.pdf [301 Moved Permanently]--> https://www.sbp.org.pk/repec/sbp/wpaper/wp03.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sbp:wpaper:03

Access Statistics for this paper

More papers in SBP Working Paper Series from State Bank of Pakistan, Research Department Contact information at EDIRC.
Bibliographic data for series maintained by Faisal Saleem ().