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Spillover effects of remittances on local public spending in developing economies

Author

Listed:
  • Rodríguez Raúl Alberto Ponce

    (Universidad Autónoma de Ciudad Juárez, Department of Social Science, Ciudad Juárez, Mexico)

  • Rodríguez Benito Alán Ponce

    (Universidad Autónoma de Ciudad Juárez, Institute of Engineering and Technology, Ciudad Juárez, Mexico)

  • Guirado Juan Carlos Medina

    (Universidad Autónoma de Ciudad Juárez, Department of Social Science, Ciudad Juárez, Mexico)

Abstract

We develop a political economy model to study spatial spillover effects of remittances on local public goods with inter-regional positive externalities. Our model postulates that spillovers of remittances are asymmetric with a complex pattern that depends on the degree of externalities of public spending, the inter-regional inequality of income, and whether local public goods are complementary or substitutes. We develop several tests to be verified empirically, for instance, our model states that if local public goods are substitutes and externalities are moderate, remittances received by households in one locality increase government spending in that locality but reduce spending in other districts. If externalities are significant, remittances affect local public spending in high-income localities but do not affect spending in low-income localities.

Suggested Citation

  • Rodríguez Raúl Alberto Ponce & Rodríguez Benito Alán Ponce & Guirado Juan Carlos Medina, 2024. "Spillover effects of remittances on local public spending in developing economies," Economics and Business Review, Sciendo, vol. 10(4), pages 7-31.
    • Handle: RePEc:vrs:ecobur:v:10:y:2024:i:4:p:7-31:n:1003
    DOI: 10.18559/ebr.2024.4.1229
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    References listed on IDEAS

    as
    1. John Page & Sonia Plaza, 2006. "Migration Remittances and Development: A Review of Global Evidence," Journal of African Economies, Centre for the Study of African Economies, vol. 15(2), pages 245-336, December.
    2. Wellisch, Dietmar, 1994. "Interregional spillovers in the presence of perfect and imperfect household mobility," Journal of Public Economics, Elsevier, vol. 55(2), pages 167-184, October.
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    More about this item

    Keywords

    remittances; local public goods; spillovers; inter-regional inequality; state and local government;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

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