The Role of Remittances in Building Economic Resilience in Nepal: A Keynesian Analysis

This study uses a Keynesian framework to investigate the impact of remittances on Nepal's economic resilience.Employing secondary data from reliable government sources spanning the period 2000/01 to 2018/19, the research examines the relationship between remittances and key macroeconomic variables, including consumption, investment, imports, and Gross National Product (GNP).The study reveals a significant increase in remittances over the years, accompanied by growth in GNP, private consumption, government expenditure, imports, and disposable income.Using multiplier analysis, the study finds that a one-unit increase in remittances leads to a 0.89 unit increase in consumption, a 1.25 unit increase in imports, a 0.32 unit increase in investment, and a 2.14 unit increase in GNP.Multiple regression analysis confirms the positive and significant relationships between remittances and consumption, imports, and GNP.The findings underscore the crucial role of remittances in Nepal's economy and the potential for harnessing these inflows for sustainable economic development.However, the study also highlights the need for policymakers to recognize that while remittances provide short-term benefits, they should not be relied upon as a long-term solution for the country's economic challenges.The study contributes to the existing literature by comprehensively analyzing remittances' impact on Nepal's economy and offering valuable insights for policy formulation and future research.