JEL Classification System
E21, E22, F24
Abstract
The discourse on micro-foundations linking microeconomic and macroeconomic principles to establish relationships in macroeconomic models have been increasing, one of which is through an Overlapping Generations Model. From its standard form, it has been extended to incorporate migration and remittances. We contribute to the discussion by introducing proportional remittances in the model and trace its effects on the trajectory of aggregate income, consumption, capital stock, and factor prices. Calibration results showed that increases in proportional remittances induce higher aggregate income, consumption, and capital accumulation paths, albeit varying degrees with respect to the elasticity of substitution between current and future consumption. That is, higher proportion of remittances accompanied by higher preferences for future consumption facilitate faster capital accumulation. We echo the need for greater interventions and assistance for migrant workers and their dependents, so that remittances continue to be an effective driver of long run economic growth and development.
Recommended Citation
Rivera, John Paolo
(2023)
"The Impact of Proportional Remittances on the Macroeconomy: Analysis from an Overlapping Generations Model for the Philippines,"
DLSU Business & Economics Review: Vol. 33:
No.
1, Article 5.
DOI: https://doi.org/10.59588/2243-786X.1087
Available at:
https://animorepository.dlsu.edu.ph/ber/vol33/iss1/5
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