Interconnections between Remittances, Inflation, and Poverty in Pakistan and India

##plugins.themes.academic_pro.article.main##

Qamar ul Hasan
Asad Abbas
Muhammad Ramzan Sheikh

Abstract

The study aims to explore the interconnection between remittances, inflation, and poverty in Pakistan and India. The study employed an Autoregressive Distributed Lag model to estimate the short-run and long-run results from 1972 to 2020. The study uses the poverty headcount ratio (as a dependent variable while the variables remittances, GDP deflator, Gini Index, foreign direct investment, tax revenue, unemployment rate, and Urbanisation are used as explanatory variables. The study has also used Granger Causality analysis. The findings of the study indicate that remittances and foreign direct investment has a negative impact on poverty. On the other hand, poverty is positively impacted by the GDP deflator, Gini Index, tax revenue, unemployment rate, and Urbanisation in both Pakistan and India. The result also shows that in both Pakistan and inida, remittances do not Granger cause poverty, and poverty Granger causes remittances. GDP deflator does not Granger cause poverty and poverty does not Granger cause GDP deflator.  Policymakers should make policies to improve the remittances in both Pakistan and India. The planners should also make and implement policies that reduce the inflation rate in both Pakistan and India to reduce poverty.

##plugins.themes.academic_pro.article.details##

How to Cite
[1]
ul Hasan, Q., Abbas , A. and Sheikh, M.R. 2024. Interconnections between Remittances, Inflation, and Poverty in Pakistan and India. Journal of Policy Research. 10, 2 (Jun. 2024), 271–282. DOI:https://doi.org/10.61506/02.00232.

References

  1. Ackrill, R., & Coleman, S. (2012). Inflation dynamics in central and eastern European countries. Discussion Papers in Economics, 2012/1.
  2. Acosta, P., Fajnzylber, P., & Lopez, J. H. (2007). The impact of remittances on poverty and human capital: evidence from Latin American household surveys (Vol. 4247). World Bank Publications.
  3. Adams Jr, R. H., Cuecuecha, A., & Page, J. (2008). The impact of remittances on poverty and inequality in Ghana. World Bank Policy Research Working Paper, (4732). DOI: https://doi.org/10.1596/1813-9450-4732
  4. Ajide, K. B., Adeniyi, O., & Raheem, I. D. (2017). Remittance, institutions and investment volatility interactions: an intercontinental analysis. South African Journal of Economics, 85(4), 553-569. DOI: https://doi.org/10.1111/saje.12162
  5. Azhar, N. A. S. B. (2020). The impacts of inflation on poverty and income distribution in ASEAN. Universiti Utara Malaysia, 3, 1-68.
  6. Bala, U., Ibrahim, A., & Hadith, N. B. (2020). Impact of population growth, poverty and unemployment on economic growth. Asian Business Research Journal, 5, 48-54. DOI: https://doi.org/10.20448/journal.518.2020.5.48.54
  7. Banga, R., & Sahu, P. K. (2010). Impact of remittances on poverty in developing countries. UNCTAD, United Nations, Switzerland, 35(2), 45-68.
  8. Bayes, A., Hossain, M., & Rahman, A. N. M. (2015). Remittances and poverty alleviation.
  9. Cahyani, A., & Sitorus, A. (2024). The Effect of Inflation, Government Expenditure, Population, and Wages on Poverty in Sumatra Island 2017-2021. Ekombis Review: Jurnal Ilmiah Ekonomi dan Bisnis, 12(1), 213-220. DOI: https://doi.org/10.37676/ekombis.v12i1.4990
  10. Chimhowu, A., Piesse, J., & Pinder, C. (2005). The socioeconomic impact of remittances on poverty reduction. Remittances: Development impact and future prospects, 2(3), 84-102.
  11. Cooray, A. V. (2007). An examination of poverty in South Asia with special reference to Sri Lanka University of Wollongong Australia, 593-603
  12. Elbadawi, I. A. (2015). Real exchange rate undervaluation and poverty. Economic Growth and Poverty reduction in Sub-Saharan Africa, 259-296. DOI: https://doi.org/10.1093/acprof:oso/9780198728450.003.0009
  13. Fujii, T. (2013). Impact of food inflation on poverty in the Philippines. Food policy, 39, 13-27. DOI: https://doi.org/10.1016/j.foodpol.2012.11.009
  14. Gemmell, N., & Morrissey, O. (2005). Distribution and poverty impacts of tax structure reform in developing countries: how little we know. Development Policy Review, 23(2), 131-144. DOI: https://doi.org/10.1111/j.1467-7679.2005.00279.x
  15. Giles, D. (2013). ARDL models-part II-bounds tests. Econometrics Beat, 19.
  16. Gnangnon, S. K. (2022). Does Poverty Matter for Tax Revenue Performance in Developing Countries?. South Asian Journal of Macroeconomics and Public Finance, 11(1), 7-38. DOI: https://doi.org/10.1177/22779787211033506
  17. Gnangnon, S. K. (2024). Poverty Volatility and Tax Revenue Instability in Developing Countries. Fudan Journal of the Humanities and Social Sciences, 17(2), 279-311. DOI: https://doi.org/10.1007/s40647-023-00377-x
  18. Gupta, P., & Jain, D. (2021). Emerging Market Sell-Offs: India and the World. Indian Public Policy Review, 2(4 (Jul-Aug)), 1-41. DOI: https://doi.org/10.55763/ippr.2021.02.04.001
  19. Gyimah-Brempong, K., & Asiedu, E. (2009, November). Remittances and poverty in Ghana. In 4th African Economic Conference, Addis Ababa, Ethiopia.
  20. Ha, N. M., Dang Le, N., & Trung-Kien, P. (2021). The impact of urbanization on poverty reduction: An evidence from Vietnam. Cogent Economics & Finance, 9(1), 1918838. DOI: https://doi.org/10.1080/23322039.2021.1918838
  21. Heshmati, A. (2007). The relationship between income inequality, poverty and globalization. In The Impact of Globalization on the World’s Poor: Transmission Mechanisms (pp. 59-93). London: Palgrave Macmillan UK. DOI: https://doi.org/10.1057/9780230625501_3
  22. Israel, A. O. (2014). Impact of foreign direct investment on poverty reduction in Nigeria,(1980–2009). Journal of Economics and Sustainable Development, 5(20), 34-45.
  23. Kalaj, E. (2010). Remittances and human capital investment: Evidence from Albania. Available at SSRN 2285641. DOI: https://doi.org/10.2139/ssrn.2285641
  24. Kalim, R., & Shahbaz, M. (2009). Remittances and poverty nexus: Evidence from Pakistan. International Research Journal of Finance and Economics, 29, 46-59.
  25. Kousar, R., Rais, S. I., Mansoor, A., Zaman, K., Shah, S. T. H., & Ejaz, S. (2019). The impact of foreign remittances and financial development on poverty and income inequality in Pakistan: Evidence from ARDL-bounds testing approach. The Journal of Asian Finance, Economics and Business, 6(1), 71-81. DOI: https://doi.org/10.13106/jafeb.2019.vol6.no1.71
  26. Kumar, B. (2019). The impact of international remittances on poverty alleviation in Bangladesh. Remittances Review, 4(1), 67-86. DOI: https://doi.org/10.33182/rr.v4i1.665
  27. Kundu, D. (2016). Microfinance delivery institutions in India-governance and management challenges. Journal of Commerce and Management Thought, 7(2), 278-297. DOI: https://doi.org/10.5958/0976-478X.2016.00019.7
  28. Liddle, B. (2017). Urbanization and inequality/poverty. Urban Science, 1(4), 35. DOI: https://doi.org/10.3390/urbansci1040035
  29. Martínez, R., Ayala, L., & Ruiz‐Huerta, J. (2001). The impact of unemployment on inequality and poverty in OECD countries. Economics of Transition, 9(2), 417-447. DOI: https://doi.org/10.1111/1468-0351.00082
  30. Mehedintu, A., Soava, G., & Sterpu, M. (2019). The effect of remittances on poverty in the emerging countries of the European Union. Sustainability, 11(12), 3265. DOI: https://doi.org/10.3390/su11123265
  31. Monnin, P. (2014). Inflation and income inequality in developed economies. CEP Working Paper Series. DOI: https://doi.org/10.2139/ssrn.2444710
  32. Morton, J., Panday, P., & Kula, M. (2010). Remittances, poverty and economic growth. International Journal of Arts and Sciences, 3(7), 390-399.
  33. Muhibbullah, M., & Das, M. R. (2019). The impact of inflation on the income inequality of Bangladesh: A time series analysis. International Journal of Business and Technopreneurship, 9(2), 141-50.
  34. Nolan, B., & Whelan, C. T. (2014). The social impact of income inequality: Poverty, deprivation, and social cohesion. Changing Inequalities in Rich Countries. Analytical and Comparative Perspectives, 146-168. DOI: https://doi.org/10.1093/acprof:oso/9780199687435.003.0006
  35. Peković, D. (2017). The effects of remittances on poverty alleviation in transition countries. Journal of international Studies, 10(4), 37-46. DOI: https://doi.org/10.14254/2071-8330.2017/10-4/2
  36. Pradhan, B. K., & Mahesh, M. (2016). Impact of remittances on poverty: an analysis of data from a set of developing countries. Economics Bulletin, 36(1), 108-117.
  37. Priambodo, A. (2021). The impact of unemployment and poverty on economic growth and the human development index (HDI). Perwira International Journal of Economics & Business, 1(1), 29-36. DOI: https://doi.org/10.54199/pijeb.v1i1.43
  38. Sehrawat, M., & Giri, A. K. (2018). The impact of financial development, economic growth, income inequality on poverty: evidence from India. Empirical Economics, 55(4), 1585-1602. DOI: https://doi.org/10.1007/s00181-017-1321-7
  39. Shahbaz, M., Aamir, N., & Shabir, M. S. (2010). Urbanization and Poverty Reduction: A Case Study of Pakistan. iup Journal of Infrastructure, 8(4), 23-37.
  40. Shamim, A., Azeem, P., & Naqvi, S. M. M. A. (2014). Impact of foreign direct investment on poverty reduction in Pakistan. International Journal of Academic Research in Business and Social Sciences, 4(10), 465. DOI: https://doi.org/10.6007/IJARBSS/v4-i10/1244
  41. Shilpakar, R. (2014). Impact of Remittance on Povety Reduction in Nepal (Doctoral dissertation, Doctoral Dissertation). Faculties of Humanities and Social Science, Tribhuwan University, Kathmandu).
  42. Sugema, I., Irawan, T., Adipurwanto, D., Holis, A., & Bakhtiar, T. (2010). The impact of inflation on rural poverty in Indonesia: An econometrics approach. International Research Journal of Finance and Economics, 58(1), 50-57.
  43. Talukdar, S. R. (2012). The effect of inflation on poverty in developing countries: A panel data analysis (Doctoral dissertation).
  44. Thalassinos, E., Ugurlu, E., & Muratoglu, Y. (2012). Income Inequality and Inflation in the EU European Research Studies Journal, Volume XV, Issue 1, 127-140. DOI: https://doi.org/10.35808/ersj/347
  45. Wilson, J. (2021). Inflation and Productive Capacity-An Empirical Risk Reduction Model. Available at SSRN 3912154. DOI: https://doi.org/10.2139/ssrn.3912154

Most read articles by the same author(s)

1 2 > >>