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Understanding the Drivers of Remittances to Pakistan

Author

Listed:
  • de Padua, David

    (Asian Development Bank)

  • Lanzafame, Matteo

    (Asian Development Bank)

  • Qureshi , Irfan

    (Asian Development Bank)

  • Taniguchi, Kiyoshi

    (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.

Suggested Citation

  • de Padua, David & Lanzafame, Matteo & Qureshi , Irfan & Taniguchi, Kiyoshi, 2024. "Understanding the Drivers of Remittances to Pakistan," ADB Economics Working Paper Series 733, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0733
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    More about this item

    Keywords

    remittances; macroeconomics; Pakistan;
    All these keywords.

    JEL classification:

    • E70 - Macroeconomics and Monetary Economics - - Macro-Based Behavioral Economics - - - General
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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