The economic dynamics of the United States and its impact on remittances to Mexico during the period 1990–2023: a time series causality study

This study examines the long-run relationship and short-run dynamics between remittances received by Mexico and the economic dynamics of the United States—specifically U.S. GDP per capita, the U.S. labour force, and the stock of Mexican-born population residing in the United States—over the period 1990–2024. Using the Autoregressive Distributed Lag bounds testing approach to cointegration, the analysis employs unit root tests, an Error Correction Model, and Granger causality tests. The results confirm the existence of a cointegrating relationship among the variables. In the long run, U.S. GDP per capita and the Mexican migrant stock have a positive and significant effect on remittances, while the U.S. labour force has a negative effect. The error correction term confirms that deviations from equilibrium are corrected at a rate of approximately 41% per year. Granger causality tests indicate that U.S. macroeconomic variables jointly cause remittances in both the long and short run. The findings underscore the procyclical nature of remittances and suggest that U.S. economic conditions are key determinants of remittance flows, with important implications for policy in Mexico.