Abstract

Inward remittances from cross-border labor migration have been a major source of income for many developing countries and Nepal is no exception. With a large part of its labor force working overseas, Nepal consistently ranks among the world’s top remittance recipients relative to GDP. Remittances support investments in housing, education and health, and increase access to modern energy. Despite the critical role of electricity, the relationship between remittance inflows and electricity consumption has been scarcely examined in Nepalese context. This study uses annual time series data from 1993 to 2023 and the Autoregressive Distributed Lag (ARDL) bounds testing approach to investigate the short-run and long-run dynamics. Electricity consumption (ELCN) is regressed on remittance inflow (REMI) as the key explanatory variable, along with gross enrollment in higher education (EDU), gross domestic product (GDP), and the consumer price index (CPI) as controls. The results show a positive and statistically significant impact of remittances on electricity consumption, consistent with the perspective that remittance-driven income increases electricity demand.

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