Nexus between remittance inflows and carbon emissions: evidence from lower-middle-income countries. 

• 
  By Imlak Shaikh
  Professor

  Co-Authors
  Angana Parashar Sarma, Birla Institute Of Technology And Science (BITS) Pilani, Pilani Campus, Pilani, India
  Krishna Muniyoora, Birla Institute Of Technology And Science (BITS) Pilani, Pilani Campus, Pilani, India
  

  Journal : Applied Economics
  Publisher : Taylor & Francis

Article citation: Sarma, A. P., Muniyoor, K., & Shaikh, I. (2025). Nexus between remittance inflows and carbon emissions: Evidence from lower-middle-income countries. Applied Economics.

Abstract

The main purpose of this article is to examine the environmental impact of remittance inflows and key macroeconomic variables. By focusing on 29 LMICs over the period 1990–2020, we apply both autoregressive distributed lag (ARDL) and non-linear autoregressive distributed lag (NARDL) models, which analyse symmetric and asymmetric effects of remittances on two carbon emission measures – production-based and consumption-based emissions. The results indicate that remittance inflows significantly increase both types of emissions, with a stronger effect on production-based emissions: a 1% rise in remittances is associated with a 1.3% increase in production-based emissions, compared to a 0.5% increase in consumption-based emissions. The results are robust across short- and long-run estimates and consistent across linear and non-linear specifications. Interestingly, financial development reflects a dual role, contributing to higher consumption-based emissions while mitigating production-based emissions. The results provide nuanced evidence on the remittance-environment nexus, emphasizing the significance of matching remittance-driven growth with sustainable development goals in LMICs.