Balance-of-payments-constrained growth in a multisectoral framework: A panel data investigation
AbstractPurpose – The aim of this paper is to contribute to the literature on balance-of-payments-constrained growth by providing an innovative empirical evaluation of a disaggregated version of the so-called Thirlwall's Law derived from a Pasinettian multisectoral framework. Design/methodology/approach – After estimating sectoral elasticities of exports and imports for a considerable panel dataset of 90 countries over the period 1965-1999, the authors have performed two empirical exercises. First, they grouped countries together by income level and evaluated a multisectoral balance-of-payments-constrained growth model by analyzing prediction errors and mean absolute deviations. Second, the authors carried out a regression validity test on the results. Findings – The main findings give support to the validity of the multisectoral version of Thirlwall's Law, providing therefore further understanding of the structural determinants of the uneven international development and guidance for the design of growth-enhancing national structural policies. Originality/value – The main value added of this contribution to the existing literature lies in the use of disaggregated trade data in conjunction with modern panel data econometric techniques to obtain empirical estimates on the balance-of-payments constraints to long-run economic growth for an unprecedently large sample of countries.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal Journal of Economic Studies.
Volume (Year): 40 (2013)
Issue (Month): 2 (March)
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Other versions of this item:
- Gouvea, Raphael Rocha & Lima, Gilberto Tadeu, 2011. "Balance-of-payments-constrained growth in a multisectoral framework: a panel data investigation," MPRA Paper 29816, University Library of Munich, Germany.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
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