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Effect of Workers' Remittances on Private Savings Behavior in Pakistan

Author(s): Rahila Munir | Maqbool H. Sial | Ghulam Sarwar | Samina Shaheen

Journal: Asian Economic and Financial Review
ISSN 2305-2147

Volume: 1;
Issue: 3;
Start page: 95;
Date: 2011;
Original page

Keywords: ARDL Co-integration | Error Correction Model | Private Savings | Remittances

The study empirically examined the macroeconomic impact of remittances onprivate savings in Pakistan by applying the ARDL Bounds Testing Approach of cointegration by using annual time series data for 1973-2007.It also analyzes theeffectiveness of remittances and foreign direct investment in promoting savings.The results reveal that worker remittances positively affect the private savings inPakistan in the long run and in the short run. So remittances are not only spent onbasic consumption needs, but are also either saved or invested. But the effect offoreign direct investment on private savings is negative because it is not directlyreached the poor households.

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