Modelling the Impact of Policy Environment on Inflows of Worker’s Remittances in Pakistan: A Multivariate Analysis

The study investigates relevant significance of various economic determinants for inflows of worker’s remittances to Pakistan. Following precedence from the policy index developed by Burnside and Dollar (2000), we develop a policy index for Pakistan and use it as a proxy for estimating the relationship of this policy index with the remittances in Pakistan. The study has also taken other conventional macroeconomic determinants into account such as GDP, exchange rate, labour force participation and interest rate spread for having efficient and precise coefficient estimates of our estimated model. The study finds that during the period (1972-2011) policy environment is one of the significant determinants of worker’s remittances in Pakistan. Further, the application of several post estimation tests ascertains that our empirical model is robust and the coefficient estimates are BLUE.