Remittances and Energy Consumption: Evidence from Morocco

Abstract

The main purpose of this study is to empirically investigate the co-integration and causal relationship between international remittances and energy consumption in the context of Morocco. Previous empirical studies associated remittances with various macroeconomic and social variables. To our knowledge, this is the first study that examines the causality between remittances and energy consumption in Morocco. The study finds a long-run equilibrium relationship between remittances and energy consumption. The results indicate that remittances influence energy consumption directly both in the short run and long run, and influence energy consumption indirectly through industrialization and economic growth in the long run.

Empirical exploration of remittances and renewable energy consumption in Bangladesh

“…The conclusion was that remittance inflows increased economic growth by strengthening investment. However, Akçay ( 2020 ) argued that remittances impacted financial development in Bangladesh only when it reaches an inflection point. The threshold level of remittances is between 7 and 8% of GDP.…”

“…Moreover, remittances could increase the energy consumption indirectly through increased economic activity, through the formation of human capital (Adams and Cuecuecha 2013), or through increased financial capital (Senbeta 2013). In fact, Akçay and Demirtaş (2015) found for Morocco that remittances increased energy consumption, because remittances increased income levels which increased demand for energy. A recent study by Das and McFarlane (2020) examined the relationship between remittances and the consumption of disaggregated non-renewable energy sources (for example, natural gas, coal, and petroleum) in Bangladesh.…”

Is energy consumption sensitive to foreign capital inflows and currency devaluation in Pakistan?

“…Foreign remittances and portfolio investment are major contributors to foreign capital inflow and affect economic growth and both variables potential determinants affecting energy consumption via various channels. For example, increasing income level of the households or consumers resulting from increased remittances inflows will enable them to purchase consumer goods, such as automobiles, refrigerators, air conditioners, and washing machines (Akcay and Demirtas, 2015). Eventually, these durable and luxury items consume energy a lot and thereby adding more demand for total energy.…”

“…Business effect reveals that increasing income of the business people due to the inflows of remittances will allow them to renew existing ventures or to create new business ventures. Creating new business ventures or expanding existing business ventures following the consumers' demand for luxury items require usage of higher energy as energy is utilized as one of the potential inputs in the process of intermediate and final industrial production activities (Akcay and Demirtas, 2015). Wealth effect entails that stock market development plays a vital role and it has been attractive particularly for business firms of an economy.…”

“…In this way, the capital gain received from domestic stock market investment and remittances inflows received from overseas induce them to expand their business activity as well as motivate them to buy luxurious items. In doing so, business firms may expand the economy and also require higher amounts of energy for business and consumption activities (Akcay and Demirtas, 2015). Mileva (2008) constructed the index of foreign capital inflows using FDI, foreign loans and portfolio (equity and bonds) investment by calculating the weighted average three series.…”