Abstract
Based on the economic theory of the family, this paper constructs a model of remittances where the migrant, besides sending money to his family, also invests in his home country. The investment is looked after by a family member in return for some monetary compensation. The model focuses on two different cases: state-contingent transfers (transfers are tied to investment outcomes) and fixed transfers (transfers are mainly of altruistic motive). As the migrant derives utilities from consumption, his consumption-investment decision is driven by preferences and future investment prospects. The transfers are to increase with both business encouraging and income compensatory effects.
| Original language | English |
|---|---|
| Pages (from-to) | 2409-2415 |
| Number of pages | 7 |
| Journal | Economic Modelling |
| Volume | 28 |
| Issue number | 6 |
| DOIs | |
| Publication status | Published - Nov 2011 |
Keywords
- Financial development
- Income transfer
- Investment
- Remittances