Drawing motivation from Dar and Nain (2023a), Nain and Kamaiah (2014), Khanday et al.

(2023a), and Khan et al. (2023), this study makes use of nonlinear auto regressive distributive
lag mode (NARDL) due to Shin et al. (2014). The NARDL estimator is the extended version
of the ARDL estimator and has received much popularity as it has been utilized in many
economic fields, such as macroeconomics (Dar and Nain, 2023a), agricultural economics
(He, 2023), environmental economics (Cıtak et al., 2020) and financial economics (Nain and
Kamaiah, 2014). Along these lines, this study argues that the employment of the NARDL
estimator is well-suited for modelling the asymmetric impact of remittance inflows on FD.
Further, Shin et al. (2014) and Lahiani et al. (2016) contend that the NARDL estimator has
superiorities over the traditional cointegration estimators that are directly suited to this study.
First, the NARDL estimator allows the difference between the short-run and long-run
asymmetries, thus enabling us to dredge up the particular characteristics, like that of the quick
response of index prices that are unknown. Secondly, the NARDL estimator allows us to test
the responses of positive and negative changes in the dependent variable due to changes in
the independent variable. Therefore, allows us to formulate the model in the line of
asymmetry. Third, the NARDL estimator works efficiently even when the interested
variables are integrated at level (I(0)) or at the first difference (I(1)) or mixed. Moreover,
NARDL gives robust results for small sample sizes, as is the present study (Pesaran and Shin,
1999; Wani et al., 2023; Katrakilidis and Trachanas, 2012) and also works with the
endogeneity issue (Narayan, 2004). Finally, both the short and long-run estimates can be
estimated simultaneously to overcome the model instability problem (Banerjee et al., 2012).
Therefore, following Pesaran et al. (2001), the short-run dynamics can be included by
estimating the following UECM model1.
p p p
∆ FD t =α 0 +∑ bi ∆ FD t −1 + ∑ ci ∆ REM t −i+ ∑ d i ∆ Y t−i
i=1 i=0 i=0

p p p
+ ∑ ei ∆ EXR t−i + ∑ f i ∆ INFt −i+ ∑ g i ∆ FDI t−i +δ 0 FD t −1
i=0 i=0 i=0

+ δ 1 REM t−1 +δ 2 Y t −1+ δ 3 EXR t−1 +δ 4 INF t −1+ δ 5 FDI t−1 +ν t

2
Where α 0represents the constant, [b i … gi ¿ signify the coefficients at Δ (first differenced) to
estimate the short-run effects, while as the estimates [δ 0 … δ 5 ¿ of lagged level variables
explain the long-run effects of stated covariates on the FD. The specified Eq. (2) assumes the
symmetrical form; however, the main objective of this study is to find the asymmetric impact
of remittances inflow on FD. Therefore, directed by Hatemi-J (2011) and Shin et al. (2014),
we split the remittances inflow into its positive and negative parts as
−¿ ¿
+¿+ ℜ M ¿ +¿¿ −¿ ¿
ℜ M t =ℜ M 0+ ℜ M t where ℜ M t , and ℜ M t are the positive and negative partial
t

sum process generated from equations (3) to (4).

1
It is important to incorporate in the model because inclusion of short run dynamics in the long run models may
lead model stability (Zafar et al., 2023).