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Article
Publication date: 28 December 2020

Ernesto Aguayo-Téllez, Adelaido García-Andrés and Jose N. Martinez

This paper aims to analyse the differential impact of foreign and domestic remittances on household expenditure shares.

Abstract

Purpose

This paper aims to analyse the differential impact of foreign and domestic remittances on household expenditure shares.

Design/methodology/approach

This study uses micro-data from a very large and detailed income-expenditure survey in Mexico and runs consumption-share Engel equations to estimate income (expenditure) elasticities for different consumption goods groups. Trying to account for the standard problems of endogeneity, this paper considers only nuclear households with migrant fathers and compare households that receive remittances from abroad, from within Mexico and those not receiving remittances.

Findings

This study finds that international remittances have a larger impact on the expenditure shares of women’s clothes, insurances and durable goods, while domestic remittances have a larger impact on the share of income dedicated to food, health and education.

Originality/value

Based on the results, differences in consumption shares between families receiving foreign and domestic remittances might depend not only on the relative size of the income transfer but also on the nature of the transfer and the sender’s capacity to monitor in person the use of those remittances. The results indicate that households that receive remittances from abroad present higher shares of consumption of some goods the literature commonly associates with the mothers’ preferences.

Details

International Journal of Development Issues, vol. 20 no. 2
Type: Research Article
ISSN: 1446-8956

Keywords

Article
Publication date: 9 July 2018

Junaid Ahmed, Mazhar Mughal and Inmaculada Martinez-Zarzoso

The purpose of this paper is to analyze differential consumption patterns of Pakistani migrant households resulting from foreign and domestic remittances.

Abstract

Purpose

The purpose of this paper is to analyze differential consumption patterns of Pakistani migrant households resulting from foreign and domestic remittances.

Design/methodology/approach

Using the Working-Leser model and a number of matching techniques, the authors analyze a representative household survey carried out in 2010–2011 to compare various expenditure categories of recipient and non-recipient households across different income brackets.

Findings

Results show that foreign remittances lead to significant consumption changes. Contrary to the widely held view, remittances do not raise the budget share on consumer goods and recreation, while allocation on education increases substantially. Households receiving domestic remittances also reflect strong focus on human capital with significantly higher shares of health and education. Recipients of international transfers living below one dollar a day spend proportionally more on food compared with their non-recipient counterparts whereas their education and health budget shares are not dissimilar.

Practical implications

The positive effect of remittances on expenditures on human capital coupled with a lack of evidence suggesting an increase in the share of conspicuous spending resulting from remittances highlights the beneficial role that remittances play in a developing country.

Originality/value

Extant literature lacks consensus on whether migrant remittances should be treated as a temporary or permanent source of household income. In this study, the authors argue and empirically show that the two need not be mutually exclusive, and may co-exist depending on the nature of remittances and household characteristics.

Details

International Journal of Social Economics, vol. 45 no. 7
Type: Research Article
ISSN: 0306-8293

Keywords

Book part
Publication date: 31 December 2010

Yan Xing, Moshe Semyonov and Yitchak Haberfeld

Remittances sent by immigrants have long been viewed as a means to combat poverty, to improve consumption, and to raise standard of living. The present study examines the…

Abstract

Remittances sent by immigrants have long been viewed as a means to combat poverty, to improve consumption, and to raise standard of living. The present study examines the impact of remittances on the economic well-being of Indian households. The analysis is conducted on a randomly selected representative sample of households in Rajasthan. Three types of households are examined: 575 households having current labor migrants, 162 never having migrants, and 232 not having migrants at present but sent migrants in the past. Analysis of the data reveals meaningful differences between the three types of households. Specifically, those having labor migrants are characterized by the highest household income and standard of living. Further analyses suggest that although remittances are likely to improve economic well-being and to secure a higher standard of living they do not have long lasting effect on the economic well-being of the families when migration ends.

Details

Migration and Culture
Type: Book
ISBN: 978-0-85724-153-5

Keywords

Article
Publication date: 15 January 2018

Ali Awdeh

The Middle East and North Africa (MENA) region is, at the same time, a major source and a major recipient of remittances, which could have significant implications on the…

Abstract

Purpose

The Middle East and North Africa (MENA) region is, at the same time, a major source and a major recipient of remittances, which could have significant implications on the economic and social developments of the region. The purpose of this paper is to analyse the socio-economic effects of the large remittance inflows in 12 remittance-dependent MENA countries.

Design/methodology/approach

This study uses the vector autoregressive model and Granger causality test on the entire set of labour-exporting MENA countries, and covers the period 1991-2015. It also exploits nine (dependent) variables that represent the economic developments, external balance, employment, and the potential uses of remittances in these countries.

Findings

The study shows a positive and significant impact running from remittances to gross domestic product and household expenditures. On the other hand, the authors found that an increase in inflation or a decline in economic conditions result in a considerable increase in remittance inflows, proving the counter-cyclical nature of these transfers.

Originality/value

In addition of examining an understudied region, the paper provided many interesting concepts regarding the form of association between remittances and receiving countries’ economic conditions, and the relationship dynamics between remittances on one hand and several macro-economic and social variables on the other.

Details

International Journal of Emerging Markets, vol. 13 no. 1
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 30 July 2020

Ahamed Lebbe Mohamed Aslam and Selliah Sivarajasingham

The objective of this study is to examine the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka over the period of…

Abstract

Purpose

The objective of this study is to examine the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka over the period of 1975–2017 using the annual time series data.

Design/methodology/approach

To test the order of integration of the variables used in this study, the augmented Dickey–Fuller (ADF) and Phillips and Perron (PP) unit root tests were employed. The autoregressive distributed lag (ARDL) bounds cointegration technique was used to examine the long-run relationship between the variables. The Granger causality test was used to examine the causal relationship between the variables.

Findings

The unit root tests confirm that the variables are stationary at 1st difference I(1). Meanwhile, the ARDL test results show that workers' remittances have a positive long-run relationship with consumption expenditure in Sri Lanka. The coefficient of the error correction term indicates that 9.3% of disequilibrium error is adjusted each year and the response variable of the consumption expenditure moves towards the long-run equilibrium path. Further, the results of the Granger causality test indicate that workers' remittances Granger cause consumption expenditure in the short-run.

Practical implications

The findings have some important policy implications for the design of efficient policy related to workers' remittances and consumption expenditure pattern, the knowledge of which will help promote the macroeconomic stability and welfare of people in Sri Lanka.

Originality/value

This study contributes to the existing literature by using newly developed ARDL bounds cointegration techniques to investigate the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka. Furthermore, to our knowledge, this study is the first research in examining the inter-temporal relationship between workers' remittances and consumption expenditure in Sri Lanka.

Details

Journal of Economic and Administrative Sciences, vol. 37 no. 2
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 30 July 2021

Sarah Salahuddin, Muhammad Mehedi Masud and Kwek Kian Teng

The purpose of this study is to examine the impact of remittance inflow on households’ savings behaviour in Bangladesh. Remittances are considered as the countercyclical…

Abstract

Purpose

The purpose of this study is to examine the impact of remittance inflow on households’ savings behaviour in Bangladesh. Remittances are considered as the countercyclical flow of income for its recipient economies. It surges the liquidity of the households receiving remittances, allows them to endure local economic shocks and facilitates them to practice productive activities. Remittances often form a big pool of resources for investment which complement the national savings and support the country’s growth through higher rates of capital accumulation. Therefore, if a significant portion of the remittance is used for savings it can lead to prominent economic growth in the long term.

Design/methodology/approach

Existing literature indicates remittance-receiving households have a greater propensity to use remittance income to meet basic consumption. However, based on the survey conducted by the Bangladesh Bureau of Statistics on remittances and household savings (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s saving (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s savings behaviour in Bangladesh.

Findings

The findings of this study represent remittances encourage households to pursue different kinds of savings in Bangladesh. Savings are made in the form of opening savings accounts, deposit pension scheme/fixed deposits/Bonds, insurance policies, also savings through non-governmental organizations, cooperative societies and savings at home. Other than remittances the demographic characteristics of the household head also influence the savings choices.

Originality/value

To enable the implementation of appropriate policies to boost savings, analysis from both perspectives; the household and the national level, requires strong vigilance and surveillance.

Details

Society and Business Review, vol. 17 no. 1
Type: Research Article
ISSN: 1746-5680

Keywords

Article
Publication date: 26 November 2018

Jamal G. Husein

The purpose of this paper is to investigate the long-run impact of foreign aid and workers’ remittances on Jordanian economic growth using time series data for the period…

Abstract

Purpose

The purpose of this paper is to investigate the long-run impact of foreign aid and workers’ remittances on Jordanian economic growth using time series data for the period 1970–2014. Following the most recent literature, the author also assess whether economic policy enhances economic growth and whether aid effectiveness is conditional on levels of economic policy.

Design/methodology/approach

The author employs unit root tests that allow for endogenously determined structural breaks (Perron, 1997) and properly utilize the autoregressive distributed lag (ARDL) or bounds testing approach to cointegration by applying both the F- and the t-test statistics (Pesaran et al., 2001). The analysis is applied to 12 different models that incorporates the various types and sources of foreign aid.

Findings

Empirical results suggest that aid and its various components, and workers’ remittances have had a positive and significant long-run impact on economic growth. Empirical results also show: no evidence supporting the hypothesis that aid is only or more effective in spurring economic growth during periods of “good” macroeconomic policy, i.e., when Jordan has undertaken World Bank Structural Adjustment Programs (SAPs); no robust evidence supporting the World Bank’s claim that SAPs are growth enhancing. Moreover, the author found strong empirical evidence suggesting that exports and human capital are also major determinants of long-run growth in Jordan.

Research limitations/implications

Although Jordan and the region at large have experienced periods of major political instability that may have had a varying impact on the economy, lack of a reliable and lengthy time series measure that accounts for political instability is not available to include in the study.

Practical implications

Using cointegration analysis, our empirical evidence reveals that foreign aid, labor remittances, exports and human capital have had a robust positive long-run impact on economic growth. Hence, the Jordanian government should promote policies that encourage donor countries and agencies to further extend aid to Jordan. Moreover, policies that promote exports and facilitate labor mobility to neighboring countries should also be encouraged and promoted.

Originality/value

Despite receiving a significant amount of foreign aid and labor remittances in the last 50 years, the author found no time series study that tested the long-run impact of these external financing sources on growth in Jordan. This study fills that gap and extends the analysis to test whether macroeconomic policy is growth enhancing and whether aid (and several of its components) are only effective or more effective in promoting growth during periods of “good” macroeconomic policy, i.e., when Jordan has undertaken a World Bank SAP.

Details

International Journal of Social Economics, vol. 46 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 19 January 2021

Rafiq Ahmed, Syed Tehseen Jawaid and Samina Khalil

Housing prices have been increasing tremendously in Pakistan, there should be many reasons but the haphazard urbanization and rapidly growing population. To find out the…

Abstract

Purpose

Housing prices have been increasing tremendously in Pakistan, there should be many reasons but the haphazard urbanization and rapidly growing population. To find out the causes of this price rise, this study aims to assess the impact of the foreign capital inflow and some domestic factors on housing prices.

Design/methodology/approach

To get the benefits of high-frequency data, it has been converted into a monthly, quarterly and yearly basis. The unit root is performed to see the stationarity, Johansen test is used for cointegration and coefficients are obtained through the ordinary least squares technique. The robustness of the results is checked with dynamic ordinary least squares and the Chow breakpoint test is used to detect structural breaks.

Findings

The housing prices have increased over time; this has been reflected in all the data sets under observation. The country has observed a rapid growth in population and urbanization that has badly affected almost every activity of city life. The impact of foreign capital inflow is positive on the house price appreciation. There is a dire need to divert such foreign funds in the housing sector so that it cannot create an artificial price hike. The government should regularly publish a housing policy for the guidance of investors and the public at large. Also, public authorities should provide housing finance facility.

Originality/value

This is a novel work to the best of the authors’ knowledge because no one has studied the impact of foreign capital inflow on the housing market for the economy of Pakistan. Furthermore, this study is different in the sense that it has disaggregated annual data into a monthly and quarterly basis to get the benefits of high-frequency data.

Details

International Journal of Housing Markets and Analysis, vol. 14 no. 5
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 25 June 2018

Tajul Ariffin Masron and Yogeeswari Subramaniam

Remittances to developing countries, especially less developed countries, have been growing tremendously as compared to the past few decades. Nevertheless, whether they…

Abstract

Purpose

Remittances to developing countries, especially less developed countries, have been growing tremendously as compared to the past few decades. Nevertheless, whether they can be a critical source of poverty alleviation in developing countries is yet to be conclusively studied. Therefore, this study investigates the implications of remittances on poverty in 44 developing countries from 2006 to 2014.

Design/methodology/approach

A dynamic panel estimator is applied to examine remittances – poverty nexus.

Findings

The results provide strong evidence that the level of poverty tends to be lower in countries with a higher flow of remittances. This may be because of the increase in the household incomes of the poor by virtue of the remittance, and/or the money remitted might be channeled to more productive activities, indicating the powerful role of remittances to maintain a sustainable reduction in poverty.

Originality/value

Although there is no direct policy applicable to remittances, several areas might be good to be assisted and improved by the government.

Details

International Journal of Development Issues, vol. 17 no. 3
Type: Research Article
ISSN: 1446-8956

Keywords

Book part
Publication date: 1 June 2022

Roberto Roson and Camille Van der Vorst

This survey presents the recent and rapidly expanding literature, which analyses the economic impacts of the COVID-19 pandemic, by means of Computable General Equilibrium…

Abstract

This survey presents the recent and rapidly expanding literature, which analyses the economic impacts of the COVID-19 pandemic, by means of Computable General Equilibrium (CGE) modelling. It does so not only by contrasting and assessing the different methodological approaches, and the key findings of the simulation exercises, but also by putting the various contributions in a historical perspective. This is necessary because each CGE-based study should be evaluated while keeping in mind when it was realised, since questions, priorities, expectations have been constantly changing during the spreading of the pandemic.

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