The remittance multiplier (-1) theorem

This article analyzes the effect of remittances on aggregate demand and equilibrium income within a Keynesian model. Our analysis demonstrates that the composition of aggregate demand varies because remittances produce an increase in consumption and a contraction in the external sector. The total value of aggregate demand is then reduced by the value of remittances in national currency. Consequently, we confirm that the remittance multiplier is (-1).

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Year of publication:	2014
Authors:	González, Luis Alberto Alonso ; Sovilla, Bruno
Published in:	Journal of Post Keynesian Economics. - M.E. Sharpe, Inc., ISSN 0160-3477. - Vol. 36.2014, 3, p. 541-554
Publisher:	M.E. Sharpe, Inc.
Subject:	remittances \| multiplier (-1) theorem \| external equilibrium \| consumption

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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