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The Macroeconomic Push-Pull Conditions Affecting Remittance Flows between Latin American Economies

Author

Listed:
  • Glebocki, Helena

    (Fairfield University)

  • Simpson, Nicole

    (Colgate University)

  • Alarcon Vaca, Felipe

    (Colgate University)

Abstract

This paper analyzes the macroeconomic push–pull determinants of bilateral remittance flows among 33 pairs of Latin American countries using quarterly data between 2005 and 2023. We apply a panel Autoregressive Distributed Lag (ARDL) framework combined with a Poisson Pseudo Maximum Likelihood (PPML) gravity model specification, distinguishing between short-run dynamics and long-run equilibrium relationships. The results show strong evidence of long-run cointegration between remittance flows and macroeconomic fundamentals. Among the determinants, GDP at origin emerges as the most important driver: stronger economic performance in the origin country is associated with significantly higher eemittance flows, suggesting that remittance-sending capacity increases during periods of economic expansion. GDP in the destination, or remittance-receiving, country is a critical driver of short-run remittance flows between countries. Inflation at origin leads to lower remittances flows in the long-run, but has no short-run impact. Overall, macroeconomic push–pull factors shape remittance corridors primarily through long-run structural channels rather than short-term cyclical fluctuations.

Suggested Citation

  • Glebocki, Helena & Simpson, Nicole & Alarcon Vaca, Felipe, 2026. "The Macroeconomic Push-Pull Conditions Affecting Remittance Flows between Latin American Economies," IZA Discussion Papers 18829, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18829
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    References listed on IDEAS

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance

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