The Foreign Remittances, Long Term Sustainable Economic Growth Nexus in Pakistan: An Empirical Analysis Using Bound Testing Approach

Abstract

Remittances are considered vital for the progress of any economy.  These are the finances that are sent by the immigrants and assist the nations to achieve their basic needs and to boost the living standard.   This research focuses on the effectiveness of foreign remittances regarding inflation and economic growth. The data used for this study are taken for the period 1972-2018 as yearly based. To check the stationary of the data Augmented Dickey-Fuller (ADF) test is used and the methodological framework includes the Autoregressive Distributed Lag (ARDL) model that concluded that the study concludes that foreign remittances have an optimistic and momentous relation with the economic growth of Pakistan. Thus, it should emerge that remittances are a superior tool to address transient poverty which occurs due to the shocks whether at the domestic or general level rather than a structural scarcity.