The long-run relationship between remittances and household consumption: evidence from Lesotho

Figures & data

Figure 1. Dependence on remittances by SADC countries (2019–2020).

Source: World Bank (2022).

Figure 2. 1982–2019 trend of financial inflows in Lesotho (values in million US$).

Source: Authors’ calculations based on World Bank (2022) data.

Table 1. Augmented dickey-fuller (ADF) unit root detection test at level.

Variables	Without trend and intercept	With intercept	With trend and intercept
CONT	1.0000	0.0006***	0.9878
REMT	0.3860	0.1120	0.2235
PCGNI	0.4063	0.0006***	0.0065***
INTR	0.4838	0.0009***	0.0028***

*** Significant at 1%.

Table 2. Augmented dickey-fuller (ADF) unit root detection test at 1^st difference.

Variables	Without trend and intercept	Intercept	Trend and Intercept
CONT	0.0510*	0.0152**	0.0040***
REMT	0.0007***	0.0215**	0.0315**
PCGNI	0.0006***	0.0129**	0.0481**
INTR	0.0000***	0.0000**	0.0004***

***significant at 1%.

**significant at 5%.

*significant at 10%.

Table 3. Johansen cointegration test.

Statistic	Likelihood ratio: None*	Likelihood ratio: At Most one	Likelihood ratio: At Most two	Likelihood ratio: At Most three*
Trace statistic	59.92105	27.59800	14.40219	6.488560
Critical value at 5%	47.85613	29.79707	15.49471	3.841465
(p-value)	0.0025	0.0878	0.0725	0.0109
Max-Eigen statistic	32.32305	13.19581	7.913629	6.488560
Critical value at 5%	27.58434	21.13162	14.26460	3.841465
(p-value)	0.0114	0.4344	0.3875	0.0109

* denotes rejection of the null hypothesis at 0.05 level.

Table 4. Error correction model.

Variable	Coefficient	STD. Error	t-statistic	Prob
C	9.1085	2.7613	6.5902	0.0210
ΔlnCONT(-1)	−1.6890	0.2751	−7.1828	0.0171
ΔlnCONT(-2)	1.8457	0.6454	6.4987	0.0251
ΔlnREMT	−0.0521	0.0034	−7.3216	0.0121
ΔlnREMT(-1)	−0.0252	0.0021	−5.2814	0.0313
ΔlnREMT(-2)	0.0135	0.0064	2.0436	0.1143
ΔlnPCGNI	0.0042	0.0035	0.4572	0.5483
ΔlnPCGNI(-1)	−0.7665	0.3203	−1.3192	0.2269
ΔlnPCGNI(-2)	0.0417	0.0057	5.4725	0.0272
ΔlnINT	0.0963	0.0043	0.6542	0.6521
ΔlnINTR(-1)	−0.0820	0.1161	−0.7218	0.4507
ΔlnINTR(-2)	−0.0424	0.0514	−0.8252	0.4321
ECT(-1)	−1.4131	0.3144	−5.3452	0.0350

Table 5. OLS regression for the whole period.

Variable	C	REMT	PCGNI	INTR
Coefficient	6.4635	0.0312	0.0091	−0.0006
Std Error	0.8251	0.0085	0.0027	0.0013
P-value	0.0033	0.0026	0.0322	0.7706

Table 6. Augmented dickey-fuller (ADF) unit root test for residuals at level.

Test Options	P-value of Residual Series
Without constant and trend	0.0033
With constant	0.0009
With constant and trend	0.0003

p-value ≤ 0.05 indicates that the series is stationary.

World Bank. (2022). Data. Washington, D.C. https://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD?locations=LS

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Data availability statement

The data used in the paper can be provided on request.