Consumption, emigration and remittances: a causal relationship? The Colombian case in the 2005-2022 period.
Keywords:
remesas, consumo final de los hogares, función consumo, vectores autorregresivosAbstract
In this paper, using a VECM Error Correction Model, the relationship between emigration, remittances, real exchange rate and household final consumption for the period 2005-2022 is studied. The analysis is supported by the Keynesian consumption function, which establishes the dependence of consumption on income. Other variables such as the real exchange rate index, Colombian emigration, which according to the perception establishes a Granger causality relationship with remittances, are included. Now, as remittances have increased, they have become part of the permanent income of recipient families, which establishes a relationship between consumption and remittances, so it would be expected that emigration affects consumption. The results found indicate that the elasticity of consumption with respect to remittances is very low, and that it is much higher with respect to percentage changes in the emigration of Colombians. Similarly, it has been found that there is a Granger causal relationship between emigration and final household consumption, and between emigration and remittances.
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