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Application of the balance-of-payments-constrained growth model to Portugal, 1965-2008


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  • Elias Soukiazis
  • Micaela Antunes


The present study aims to verify whether the balance-of-payments-constrained growth approach is suitable for explaining the Portuguese growth performance during the past decades. To smooth cyclical variations, 15-year overlapping periods are considered in the computation of "Thirlwall's law," assuming that income elasticity of imports is either constant or variable over time. It is shown that actual growth can accurately be predicted by the ratio of export growth to the income elasticity of the demand for imports. Evidence also reveals that Portugal grew slightly faster than the rate consistent with the balance-of-payments equilibrium accumulating external deficits over time. Considering the pre- and postaccession periods to the European Union, it is found that Portugal grew at a slower rate in the latter period, explained by a higher income elasticity of imports and lower export growth.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 34 (2011)
Issue (Month): 2 (January)
Pages: 353-380

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Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:353-380

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Keywords: balance-of-payments equilibrium growth rate; income elasticities with respect to trade; overlapping periods; 2SLS regressions;


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Cited by:
  1. Elias Soukiazis & Pedro André Cerqueira & Micaela Antunes, 2012. "Growth rates constrained by internal and external imbalances and the role of relative prices: Empirical evidence from Portugal," GEMF Working Papers 2012-08, GEMF - Faculdade de Economia, Universidade de Coimbra.
  2. Elias Soukiazis & Eva Muchova, 2012. "Slovak economic growth and the consistency of the balance-of-payments constraint approach," GEMF Working Papers 2012-16, GEMF - Faculdade de Economia, Universidade de Coimbra.
  3. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, Economia civile, vol. 64(259), pages 307-351.


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