| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5055368 | Economic Modelling | 2011 | 7 Pages |
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.
⺠This paper examines investment related motive versus altruistic motive of remittances. ⺠It models state-contingent transfers and fixed transfers. ⺠Remittances increase with business encouraging and income compensatory effects. ⺠Financial development helps channel remittances towards investment.
