Impact of Personal Remittances on Economic Growth of Pakistan: A Multivariate Cointegration Analysis

The study targets the impact of personal remittances on economic growth in case of Pakistan for the time period 1980-2014. For this purpose, Foreign Direct Investment (FDI) and Human Capital are used as control variables. Using Augmented Dickey Fuller (ADF) and Philips-Peron (PP) unit root tests, all the variables came stationary at order one or I (1). Johansen Cointegration showed a long run relationship between personal remittances, FDI, human capital and economic growth. The results showed a positive long run impact of personal remittances, FDI and human capital on economic growth of Pakistan. Similarly, ECT (-1) term was -0.04 and also significant. Granger causality also showed a unidirectional causality running from personal remittances to economic growth. Moreover, the diagnostic tests showed normality of residuals, no autocorrelation and stationarity of residuals at level. Government should formulate such policies that encourage remittances in Pakistan by formulating reliable and efficient transfer mechanism to cheap transfer cost. Keywords: Personal Remittances, FDI, Economics Growt

Does Financial Development Promote Industrial Production in Pakistan? Evidence from Combine Cointegration and Causality Approach.

This study investigates the impact of financial development on industrial production over the period of 1972-2014 in case of Pakistan. We use Bayer and Hanck (2013) combine cointegration technique to predict the long run relationship between financial development, saving and industrial production. The results predict three cointegration vectors which confirm the existence of long run relationship between underlying variables. The empirical evidence shows positive impact of financial development and savings on industrial growth in long run as well as in short run. The result of VECM Granger causality confirms the bidirectional causality between financial development and industrial production in long run. The variance decomposition approach shows that financial development has majour contribution in explaining industrial production. The impulse response function also confirms the results of variance decomposition. This research opens the new insights for policy making

Does Financial Development Promote Industrial Production in Pakistan? Evidence from Combine Cointegration and Causality Approach.

This study investigates the impact of financial development on industrial production over the period of 1972-2014 in case of Pakistan. We use Bayer and Hanck (2013) combine cointegration technique to predict the long run relationship between financial development, saving and industrial production. The results predict three cointegration vectors which confirm the existence of long run relationship between underlying variables. The empirical evidence shows positive impact of financial development and savings on industrial growth in long run as well as in short run. The result of VECM Granger causality confirms the bidirectional causality between financial development and industrial production in long run. The variance decomposition approach shows that financial development has majour contribution in explaining industrial production. The impulse response function also confirms the results of variance decomposition. This research opens the new insights for policy making