The remittance multiplier (-1) theorem

Luis Alonso González and Bruno Sovilla

Journal of Post Keynesian Economics, 2014, vol. 36, issue 3, 541-554

Abstract: 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).

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:36:y:2014:i:3:p:541-554

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DOI: 10.2753/PKE0160-3477360307

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