The long-run relationship between remittances and household consumption: evidence from Lesotho
AbstractThe study examines the long-run relationship between remittances and household consumption in Lesotho for the period 1991-2019 using the Johansen cointegration technique and the Engle-Granger Residual Approach. Despite remittances in Lesotho representing over 20% of GDP which is highly signi...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2024-12-01
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| Series: | Cogent Economics & Finance |
| Subjects: | |
| Online Access: | https://www.tandfonline.com/doi/10.1080/23322039.2024.2307098 |
| _version_ | 1797341749527445504 |
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| author | Daniel Makina |
| author_facet | Daniel Makina |
| author_sort | Daniel Makina |
| collection | DOAJ |
| description | AbstractThe study examines the long-run relationship between remittances and household consumption in Lesotho for the period 1991-2019 using the Johansen cointegration technique and the Engle-Granger Residual Approach. Despite remittances in Lesotho representing over 20% of GDP which is highly significant relative to other African countries, a long-run relationship between remittances and household consumption has not been conclusively established in prior literature. The results of this study, however, confirms a significant positive long-run equilibrium relationship between household consumption, remittances and GNI per capita. According to the results, there exist a negative but insignificant relationship between household consumption and real interest rate. However, in the short-run, remittances negatively affect household consumption. This implies that increase in remittances in Lesotho reduce household consumption initially. A possible explanation is the existence of household consumption adjustment phase when remittances are first received. This means that in the short-run consumption is mostly financed from other income sources which may be informal, as the case with many developing countries. However, in the long run this pattern subsides. |
| first_indexed | 2024-03-08T10:22:31Z |
| format | Article |
| id | doaj.art-42a58e9ecddf4676ab9b717b2862ff64 |
| institution | Directory Open Access Journal |
| issn | 2332-2039 |
| language | English |
| last_indexed | 2024-03-08T10:22:31Z |
| publishDate | 2024-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Cogent Economics & Finance |
| spelling | doaj.art-42a58e9ecddf4676ab9b717b2862ff642024-01-27T12:11:41ZengTaylor & Francis GroupCogent Economics & Finance2332-20392024-12-0112110.1080/23322039.2024.2307098The long-run relationship between remittances and household consumption: evidence from LesothoDaniel Makina0Finance, Risk Management & Banking, University of South Africa, Pretoria, South AfricaAbstractThe study examines the long-run relationship between remittances and household consumption in Lesotho for the period 1991-2019 using the Johansen cointegration technique and the Engle-Granger Residual Approach. Despite remittances in Lesotho representing over 20% of GDP which is highly significant relative to other African countries, a long-run relationship between remittances and household consumption has not been conclusively established in prior literature. The results of this study, however, confirms a significant positive long-run equilibrium relationship between household consumption, remittances and GNI per capita. According to the results, there exist a negative but insignificant relationship between household consumption and real interest rate. However, in the short-run, remittances negatively affect household consumption. This implies that increase in remittances in Lesotho reduce household consumption initially. A possible explanation is the existence of household consumption adjustment phase when remittances are first received. This means that in the short-run consumption is mostly financed from other income sources which may be informal, as the case with many developing countries. However, in the long run this pattern subsides.https://www.tandfonline.com/doi/10.1080/23322039.2024.2307098Remittancesmigrantshousehold consumptionJohansen cointegrationLesothoRobert Read, University of Lancaster, United Kingdom |
| spellingShingle | Daniel Makina The long-run relationship between remittances and household consumption: evidence from Lesotho Cogent Economics & Finance Remittances migrants household consumption Johansen cointegration Lesotho Robert Read, University of Lancaster, United Kingdom |
| title | The long-run relationship between remittances and household consumption: evidence from Lesotho |
| title_full | The long-run relationship between remittances and household consumption: evidence from Lesotho |
| title_fullStr | The long-run relationship between remittances and household consumption: evidence from Lesotho |
| title_full_unstemmed | The long-run relationship between remittances and household consumption: evidence from Lesotho |
| title_short | The long-run relationship between remittances and household consumption: evidence from Lesotho |
| title_sort | long run relationship between remittances and household consumption evidence from lesotho |
| topic | Remittances migrants household consumption Johansen cointegration Lesotho Robert Read, University of Lancaster, United Kingdom |
| url | https://www.tandfonline.com/doi/10.1080/23322039.2024.2307098 |
| work_keys_str_mv | AT danielmakina thelongrunrelationshipbetweenremittancesandhouseholdconsumptionevidencefromlesotho AT danielmakina longrunrelationshipbetweenremittancesandhouseholdconsumptionevidencefromlesotho |