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Spatial impact of overseas Filipino workers’ remittances on the Philippine economy

Philippine Review of Economics

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Title Spatial impact of overseas Filipino workers’ remittances on the Philippine economy
 
Creator Goce-Dakila, Cristela; De La Salle University
Dakila Jr., Francisco G.; Bangko Sentral ng Pilipinas
 
Subject spatial impact; overseas Filipino Workers' remittances; computable general equilibrium modeling; Philippine economy
 
Description Remittance inflows from overseas Filipino workers have become the second-largest source of foreign exchange for the Philippine economy. In view of this, we assess the vulnerability of Philippine households to an exogenous shock in the form of a five-percent decline in remittances. We utilize a spatial computable general equilibrium model based on a five-region social accounting matrix. A three-level production function is specified, namely, Cobb-Douglas between labor and capital to produce value added; then Leontief between non-transport inputs and value added to produce output net of transport, which is then combined with transport inputs at the third level, using again a Cobb-Douglas production function. Capital and labor incomes accrue to the households who then allocate these to consumption and savings with a constant marginal propensity to consume. Overseas remittances enter as transfer payments to households. Consumption is allocated among different commodities, using a Cobb-Douglas utility function. Final demand is then built up in a standard way. Results indicate that in absolute terms, Northern Luzon middle- and low-income households bear the highest percentage reductions in income. On the other hand, Mindanao households are the least vulnerable. These results are then compared with those of a two-region model using a single-level Leontief production function and Cobb-Douglas utility function.Classification-JEL: F24, D58
 
Publisher Philippine Review of Economics
 
Contributor —
 
Date 2010-09-02
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/8
 
Source Philippine Review of Economics; Vol 46, No 2 (2009): Papers in Honor of Rolando A. Danao
1655-1516
 
Language eng
 
Relation http://www.econ.upd.edu.ph/pre/index.php/pre/article/view/8/674
 
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