The Impact of International Remittances on Public Debt Sustainability in Kerala: Evidence from the FMOLS Approach

Title

The Impact of International Remittances on Public Debt Sustainability in Kerala: Evidence from the FMOLS Approach

Creator

Sabu, Anjana; Mohandas, Vineeth

Description

Remittances from Keralas migrant workers and professionals constitute a vital financial inflow, surpassing their relative significance in most other Indian states. With public debt nearing 60 % of NSDP, these transfers offer a potential buffer for debt sustainability. Applying Oates theory within Bohns debt-sustainability framework using an FMOLS model, and validated through Johansen testing, this study examines the remittancedebt nexus from 1980 to 2023. FMOLS results indicate a deterioration of debt sustainability despite substantial remittance inflows. The findings emphasize the need to reduce market borrowings, enhance the fiscal role of remittances, and promote policies supporting formal transfer channels, source diversification, remittance-linked investment, and financial literacy among migrant households to strengthen Keralas long-term fiscal resilience and enable more productive use of remittances. 2025 the author(s), published by De Gruyter.

Source

Statistics, Politics and Policy;Volume;16;Issue;3;pp.331-358

Date

01-01-2025

Publisher

Walter de Gruyter GmbH

Subject

debt sustainability; FMOLS-VECM approach; international remittances; migration; state economy

Coverage

Sabu A., Department of Economics, Christ University, Bangalore Yeshwanthpur Campus, Near Tumkur Road, Nagasandra, Karnataka, Bangalore, 560073, India; Mohandas V., Department of Economics, Christ University, Bangalore Yeshwanthpur Campus, Near Tumkur Road, Nagasandra, Karnataka, Bangalore, 560073, India

Rights

All Open Access; Hybrid Gold Open Access

Relation

ISSN: 21946299;

Format

online

Language

English

Type

Article

Identifier

https://doi.org/10.1515/spp-2025-0004

https://www.scopus.com/pages/publications/105017133729?origin=resultslist