October 2015 Vol. 3 No.10

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Bilal SM
Shah MK

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Original Research Article

Workers’ remittances and household consumption volatility in South Asia

Sayyed Muhammad Bilal¹, Madeeha Rauf², Muhammad Nadeem^*3, Tauqeer Almani⁴ and Muhammad Kamal Shah⁵

¹Senior Instructor, Department of Economics, National University of Modern Languages, Multan Campus
²Ph.D scholar, National College of Business Administration and Economics, Lahore Campus
³Faculty of Management Sciences, National University of Modern Languages, Pakistan
⁴School of Economic Sciences, Federal Urdu University of Arts, Science and Technology (FUUAST), Islamabad
⁵Ph.D scholar, Imperial University, Lahore

*Corresponding Author’s E-mail: muhammadnadeem19@gmail.com

Accepted September 07, 2015

Abstract

Booming remittances inflow to south Asian economies have become significant source of foreign finance after Foreign Direct Investment (FDI). This paper presents the relationships between remittances and Household Consumption Volatility for five main south Asian economies India, Bangladesh, Pakistan, Nepal and Sri Lanka from 1975 to 2010. The Panel Generalized Method of Moments (GMM) has employed for control endogeniety of variables. The results show that remittances are responsible for diminishing consumption volatility. The main policy implication based on our finding is that financial sector should be improved for diminishing consumption volatility.

Key Words: Remittances, South Asia, Consumption Volatility, GMM, Financial Sector
JEL Classification: E01; F24; F43