Workers' remittances and import demand in Pakistan

Abstract

Using quarterly data for the period 1975-2004, this paper estimates import functions for Pakistan both at the aggregate and disaggregated levels. Findings show that remittances do have a significant impact on the demand for imports in the aggregate equation, with the elasticity for remittances being 0.15, and 0.70 for domestically generated income, in the long run (natural logarithm). Remittances, however, have no impact on the demand for imported consumer goods; their impact on the import of raw materials and capital goods are greater than that of domestically generated income.

JEL classification: F2