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Economic growth and foreign liquidity in Brazil after 1970

Author

Listed:
  • Fabrício de Assis C. Vieira
  • Márcio Holland

Abstract

This paper assesses the relationship between the capital account and the Brazilian economic growth according to balance-of-payments constraint approach. The Thirlwall (1979)’s simple rule is extended to take into consideration capital account and several empirical evidence using time series analysis are shown. Conversely to the simple rule when fitted rates of balance-of-payment equilibrium economic growth average bellow the observed ones, fitted rates of growth using the rule extended to international liquidity are consistently greater than the observed ones. It is fair to conclude that, first, the Brazilian economy grows better during abundant international liquidity and, second, the economy sub utilizes such advantage growing far less than it could grow. JEL Classification: E32; O16; C32.

Suggested Citation

  • Fabrício de Assis C. Vieira & Márcio Holland, 2010. "Economic growth and foreign liquidity in Brazil after 1970," Brazilian Journal of Political Economy, Center of Political Economy, vol. 30(2), pages 233-253.
    • Handle: RePEc:ekm:repojs:v:30:y:2010:i:2:p:233-253:id:440
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    More about this item

    Keywords

    economic growth; international liquidity; Thirlwall law; Brazilian economy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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