Remittances, electricity consumption and electric power losses in Jamaica

Abstract

PurposeThe purpose of this paper is to examine the impact of remittance inflows (remittances) on electricity consumption and electric power losses in Jamaica.Design/methodology/approachThe authors use annual data from 1976 to 2014 and apply vector error correction modelling, Granger causality testing and impulse response analysis.FindingsFirst, the authors find that there is co-integration between remittances and the energy variables, namely electricity consumption and electric power losses. Second, short-run Granger causality exists between the energy variables and remittances. This causality is bidirectional between the energy variables and positive changes in remittances, but it is unidirectional running from the energy variables to negative movements in remittances. Third, the authors find that in the long-run remittances have a negative relationship with electric power losses and a positive relationship with the consumption of electricity.Practical implicationsFindings from this paper will help to elucidate the relationship between electricity consumption, and electric power losses, and remittances.Social implicationsThe problem of electric power losses is acute in Jamaica and it is mostly due to theft. At the same time, Jamaica receives significant remittances. Social policy could have a role to encourage the use of remittances to help stem the theft of electricity.Originality/valueThis is the first study that examines the relationships between remittances, electricity consumption and electric power losses.