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Effect of remittances on GDP and the trade deficit in Honduras

Author

Listed:
  • Rene Santos

    (Universidad Tecnológica Centroamericana)

Abstract

The purpose of this article is to analyze the effect of workers’ remittances on the Gross Domestic Product (GDP) and the trade deficit in Honduras. The article was conducted under a quantitative approach, using time series data with annual periodicity from 1990 to 2019 extracted from the Central Bank of Honduras (BCH) and the World Bank (WB). A vector autoregressive model (VAR) is established. The results are presented using impulse response function figures (IRF) and Granger causality table of the VAR model, which reveal a positive response of GDP and a negative response of the trade deficit in the short and medium term to the shock caused by the inflow of workers’ remittances. Remittances were also found to be predictive of GDP variability at the 0.1 significance level and of the trade deficit at the 0.05 significance level.

Suggested Citation

  • Rene Santos, 2023. "Effect of remittances on GDP and the trade deficit in Honduras," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 99, pages 111-152, July-Dece.
    • Handle: RePEc:lde:journl:y:2023:i:99:p:111-152
    DOI: 10.17533/udea.le.n99a350324
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    File URL: https://revistas.udea.edu.co/index.php/lecturasdeeconomia/article/view/350324
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    More about this item

    Keywords

    Remittances; GDP; trade deficit; VAR;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances

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