Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/321417 
Authors: 
Year of Publication: 
2024
Citation: 
[Journal:] Cogent Economics & Finance [ISSN:] 2332-2039 [Volume:] 12 [Issue:] 1 [Article No.:] 2307098 [Year:] 2024 [Pages:] 1-13
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
The study examines the long-run relationship between remittances and household consumption in Lesotho for the period 1991-2019 using the Johansen cointegration technique and the Engle-Granger Residual Approach. Despite remittances in Lesotho representing over 20% of GDP which is highly significant relative to other African countries, a long-run relationship between remittances and household consumption has not been conclusively established in prior literature. The results of this study, however, confirms a significant positive long-run equilibrium relationship between household consumption, remittances and GNI per capita. According to the results, there exist a negative but insignificant relationship between household consumption and real interest rate. However, in the short-run, remittances negatively affect household consumption. This implies that increase in remittances in Lesotho reduce household consumption initially. A possible explanation is the existence of household consumption adjustment phase when remittances are first received. This means that in the short-run consumption is mostly financed from other income sources which may be informal, as the case with many developing countries. However, in the long run this pattern subsides.
Subjects: 
Remittances
migrants
household consumption
Johansen cointegration
Lesotho
JEL: 
D12
I32
O15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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