Remittance and Liquidity Shocks in a Dollarized Economy: VAR Evidence for Ecuador (2007–2024)
Article Sidebar
Main Article Content
Abstract
This study evaluates the impact of remittances on Ecuador's macroeconomic dynamics through the application of a Vector Autoregressive (VAR) model, taking into account variables such as gross domestic product (GDP), money supply (M2), inflation, and the real exchange rate (RER). Using quarterly data for the period 2007–2024, the results show that remittances have a positive effect on economic growth in the short term, although this impact diminishes in the long term, affecting structural growth. From an economic perspective, a persistent negative effect on the M2 aggregate is identified, indicating low financial intermediation of these flows in the Ecuadorian economy. Furthermore, remittances generate temporary increases in inflation and a slight appreciation of the real exchange rate, without producing significant imbalances in external competitiveness. Overall, the findings indicate that remittances primarily serve as a mechanism for stabilizing consumption rather than as an engine of sustained growth, highlighting the need to promote greater participation from the financial system to enhance their economic impact.
Downloads
Article Details
Section
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
How to Cite
References
Acosta, P. A., Calderón, C., Fajnzylber, P., & López, H. (2007). What is the impact of international remittances on poverty and inequality in Latin America? (Policy Research Working Paper No. 4249). World Bank. https://doi.org/10.1596/1813-9450-4249 DOI: https://doi.org/10.1596/1813-9450-4249
Ahortor, C. R. K., & Adenutsi, D. E. (2008). The impact of remittances on economic growth in small-open developing economies (MPRA Paper No. 37109). Munich Personal RePEc Archive. https://mpra.ub.uni-muenchen.de/37109/
Banco Central del Ecuador. (2024, abril). Estadísticas macroeconómicas: Presentación coyuntural. https://contenido.bce.fin.ec/documentos/Estadisticas/SectorReal/Previsiones/IndCoyuntura/EstMacro042024.pdf
Barajas, A., Chami, R., Fullenkamp, C., Gapen, M. T., & Montiel, P. J. (2009). Do workers’ remittances promote economic growth? (IMF Working Paper No. 09/153). International Monetary Fund. https://doi.org/10.5089/9781451873009.001 DOI: https://doi.org/10.5089/9781451873009.001
Bertoli, S., & Marchetta, F. (2014). Migration, remittances and poverty in Ecuador. The Journal of Development Studies, 50(8), 1067–1089. https://doi.org/10.1080/00220388.2014.919382 DOI: https://doi.org/10.1080/00220388.2014.919382
Bucheli, J. R., Bohara, A. K., & Fontenla, M. (2018). Mixed effects of remittances on child education. IZA Journal of Development and Migration, 8, Article 10. https://doi.org/10.1186/s40176-017-0118-y DOI: https://doi.org/10.1186/s40176-017-0118-y
Calero, C., Bedi, A. S., & Sparrow, R. (2008). Remittances, liquidity constraints and human capital investments in Ecuador (IZA Discussion Paper No. 3358). Institute for the Study of Labor. https://docs.iza.org/dp3358.pdf DOI: https://doi.org/10.2139/ssrn.1294527
Carpio Chiriboga, R. E., Gutiérrez Vistín, R. J., Tapia Monserrate, N. A., & Oviedo Carpio, S. E. (2025). El impacto de las remesas en el crecimiento económico de Ecuador: Un enfoque de prueba de límites ARDL. Revista Pertinencia Académica, 9(4), 1–30. https://doi.org/10.5281/zenodo.17487245 DOI: https://doi.org/10.56048/MQR20225.9.3.2025.e911
Cazachevici, A., Havranek, T., & Horvath, R. (2020). Remittances and economic growth: A meta-analysis. World Development, 134, Article 105021. https://doi.org/10.1016/j.worlddev.2020.105021 DOI: https://doi.org/10.1016/j.worlddev.2020.105021
Ekanayake, E. M., & Moslares, C. (2020). Do remittances promote economic growth and reduce poverty? Evidence from Latin American countries. Economies, 8(2), Article 35. https://doi.org/10.3390/economies8020035 DOI: https://doi.org/10.3390/economies8020035
Giuliano, P., & Ruiz-Arranz, M. (2009). Remittances, financial development, and growth. Journal of Development Economics, 90(1), 144–152. https://doi.org/10.1016/j.jdeveco.2008.10.005 DOI: https://doi.org/10.1016/j.jdeveco.2008.10.005
Göbel, K. (2013). Remittances, expenditure patterns, and gender: Parametric and semiparametric evidence from Ecuador. IZA Journal of Migration, 2, Article 1. https://doi.org/10.1186/2193-9039-2-1 DOI: https://doi.org/10.1186/2193-9039-2-1
Gondo, R., Aidarova, A., & Singh, M. (2020). Impact of remittances on natural rate of dollarization—Trends in Caucasus and Central Asia (IMF Working Paper No. 20/185). International Monetary Fund. https://doi.org/10.5089/9781513556536.001 DOI: https://doi.org/10.5089/9781513556536.001
Jansen, D. W., Vacaflores, D. E., & Naufal, G. S. (2012). The macroeconomic consequences of remittances. ISRN Economics, 2012, Article 218071. https://doi.org/10.5402/2012/218071 DOI: https://doi.org/10.5402/2012/218071
Khan, A. A., Hidthir, M. H. B., Mansur, M., & Ahmad, Z. (2025). Role of financial inclusion in enhancing the effect of remittance on economic growth in developing countries. Cogent Economics & Finance, 13(1), Article 2476093. https://doi.org/10.1080/23322039.2025.2476093 DOI: https://doi.org/10.1080/23322039.2025.2476093
Llamuca-Damián, J. C., & Montesdeoca-Espín, L. C. (2025). Ahorro e inflación en Ecuador: análisis mediante el modelo VECM (vector de corrección de errores). Revista Científica Zambos, 4(3), 92-107. https://doi.org/10.69484/rcz/v4/n3/134 DOI: https://doi.org/10.69484/rcz/v4/n3/134
Mawutor, J. K. M., Sogah, E., Christian, F. G., Aboagye, D., Preko, A. D. K., Mensah, B. D., & Boateng, O. N. (2023). Foreign direct investment, remittances, real exchange rate, imports, and economic growth in Ghana: An ARDL approach. Cogent Economics & Finance, 11(1), Article 2185343. https://doi.org/10.1080/23322039.2023.2185343 DOI: https://doi.org/10.1080/23322039.2023.2185343
Meyer, D., & Shera, A. (2017). The impact of remittances on economic growth: An econometric model. EconomiA, 18(2), 147–155. https://doi.org/10.1016/j.econ.2016.06.001 DOI: https://doi.org/10.1016/j.econ.2016.06.001
Mundaca, B. G. (2009). Remittances, financial market development, and economic growth: The case of Latin America and the Caribbean. Review of Development Economics, 13(2), 288–303. https://doi.org/10.1111/j.1467-9361.2008.00487.x DOI: https://doi.org/10.1111/j.1467-9361.2008.00487.x
Oliva, M.-A., & Khinashvili, N. (2024). Managing remittances inflows with foreign exchange intervention (IMF Working Paper No. 2024/191). International Monetary Fund. https://doi.org/10.5089/9798400285677.001 DOI: https://doi.org/10.5089/9798400285677.001
Preciado-Ramírez, J. D., & Herrera-Enríquez, G. (2023). Modelos de negocio sostenibles basados en economía circular. Revista Científica Ciencia Y Método, 1(1), 14-27. https://doi.org/10.55813/gaea/rcym/v1/n1/7 DOI: https://doi.org/10.55813/gaea/rcym/v1/n1/7
Ratha, D., Chandra, V., Kim, E. J., Plaza, S., & Shaw, W. (2023). Migration and Development Brief 39: Leveraging diaspora finances for private capital mobilization. World Bank. https://documents1.worldbank.org/curated/en/099740408142422676/pdf/IDU-84dfd61b-e135-4242-a202-3728b2e8fa86.pdf
Vacaflores, D. E., & Kishan, R. P. (2014). Remittances, international reserves, and exchange rate regimes in 9 Latin American countries, 1997–2010. Applied Econometrics and International Development, 14(2), 97–116. https://www.usc.es/economet/reviews/aeid1428.pdf