IDEAS home Printed from https://ideas.repec.org/a/vrs/ecobur/v10y2024i4p7-31n1003.html
   My bibliography  Save this article

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
    as

    Download full text from publisher

    File URL: https://doi.org/10.18559/ebr.2024.4.1229
    Download Restriction: no
    File URL: https://libkey.io/10.18559/ebr.2024.4.1229?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tidiane Ly, 2018. "Sub-metropolitan tax competition with household and capital mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1129-1169, October.
    2. Francis Bloch & Unal Zenginobuz, 2012. "Oates' Decentralization Theorem with Household Mobility," Working Papers hal-00657823, HAL.
    3. Anton Bondarev & Beat Hintermann & Frank C. Krysiak & Ralph Winkler, 2017. "The Intricacy of Adapting to Climate Change: Flood Protection as a Local Public Goods Game," CESifo Working Paper Series 6382, CESifo.
    4. Hikaru Ogawa, 2010. "Fiscal Competition among Regional Governments - Tax Competition, Expenditure Competition and Externalities -," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 6(1), pages 1-30, February.
    5. Junaid Ahmed & Mazhar Mughal & Inmaculada Martínez‐Zarzoso, 2021. "Sending money home: Transaction cost and remittances to developing countries," The World Economy, Wiley Blackwell, vol. 44(8), pages 2433-2459, August.
    6. Casella, Alessandra, 2005. "Redistribution policy: A European model," Journal of Public Economics, Elsevier, vol. 89(7), pages 1305-1331, July.
    7. Galina Ševčenko-Kozlovska & Kristina Čižiūnienė, 2022. "A Study of the Relationship between Lithuanian International Migration Flows and Transport Sector Performance Indicators," Sustainability, MDPI, vol. 14(16), pages 1-22, August.
    8. Caplan, Arthur J. & Silva, Emilson C.D., 2005. "An efficient mechanism to control correlated externalities: redistributive transfers and the coexistence of regional and global pollution permit markets," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 68-82, January.
    9. Stephanie Armbruster & Beat Hintermann, 2020. "Decentralization with porous borders: public production in a federation with tax competition and spillovers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(3), pages 606-642, June.
    10. Spiros Bougheas & Panicos Demetriades & Edgar Morgenroth, 2003. "International aspects of public infrastructure investment," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 884-910, November.
    11. Naoto Aoyama & Emilson Caputo Delfino Silva, 2023. "Efficient Decentralized Leadership under Hybrid Work and Attachment to Regions," Games, MDPI, vol. 14(2), pages 1-18, March.
    12. ., 2012. "Migration impact assessment: a state of the art," Chapters, in: Peter Nijkamp & Jacques Poot & Mediha Sahin (ed.), Migration Impact Assessment, chapter 1, pages 3-62, Edward Elgar Publishing.
    13. Arthur Caplan & Emilson Silva, 2007. "An equitable, efficient and implementable scheme to control global carbon dioxide emissions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(3), pages 263-279, June.
    14. Emilson Caputo Delfino Silva & Vander Mendes Lucas, 2016. "Common labor market, attachment and spillovers in a large metropolis," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 693-715, August.
    15. Wolfgang Eggert & Laszlo Goerke, "undated". "Fiscal Policy, Economic Integration and Unemployment," EPRU Working Paper Series 02-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    16. Alberto Porto, 2023. "Dinámica de la población de las municipalidades de la provincia de Buenos Aires 1869-2022," CEFIP, Working Papers 046, CEFIP, Universidad Nacional de La Plata.
    17. Matthias Wrede, 2014. "Agglomeration, tax competition, and fiscal equalization," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 21(6), pages 1012-1027, December.
    18. Suhas Ketkar & Dilip Ratha, 2009. "Innovative Financing for Development," World Bank Publications - Books, The World Bank Group, number 6549.
    19. Lisa Grazzini & Alessandro Petretto, 2017. "Spillover Effects in a Federal Country with Vertical Tax Externalities," Public Finance Review, , vol. 45(5), pages 701-720, September.
    20. Arman Mansoorian, 1996. "Fiscal Externalities Over Long Horizons," Working Papers 1996_04, York University, Department of Economics.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:ecobur:v:10:y:2024:i:4:p:7-31:n:1003. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.