Impact of oil prices on remittances to Pakistan from GCC countries: evidence from panel asymmetric analysis

Abstract

International migration and remittances from oil-exporting Gulf countries are important sources of employment, income and foreign exchange for Pakistan This study investigates the asymmetric impact of oil prices on remittances to Pakistan from GCC countries, over the period 1980 to 2018, by employing the recently advanced non-linear panel pooled mean group (PMG) model The findings show that oil prices and remittance are asymmetrically associated The increasing oil prices have a significant positive effect only in the long run, whereas reducing oil prices reveal a significant negative effect only in the short run Findings of other explanatory variables show that the economic condition in host countries, exchange rate, and trade relations have positive effects only in the long run, whereas the economic condition in the home country has significant negative effects in the long run and positive effect in the short run This study urges oil exporters to stabilise oil supply and prices, and Pakistan to enhance trade relations, exchange rate adjustments and financial development