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Balance of payments constrained growth models: history and overview

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  • Anthony P. Thirlwall

    ()
    (University of Kent, Department of Economics)

Abstract

Thirlwall's 1979 balance of payments constrained growth model predicts that a country's long run growth of GDP can be approximated by the ratio of the growth of real exports to the income elasticity of demand for imports assuming negligible effects from real exchange rate movements. The paper surveys developments of the model since then, allowing for capital flows, interest payments on debt, terms of trade movements, and disaggregation of the model by commodities and trading partners. Various tests of the model are discussed, and an extensive list of papers that have examined the model is presented.

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File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9404/9299
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Bibliographic Info

Article provided by Economia civile in its journal PSL Quarterly Review.

Volume (Year): 64 (2011)
Issue (Month): 259 ()
Pages: 307-351

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Handle: RePEc:psl:pslqrr:2011:41

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Related research

Keywords: Balance of payments; growth; Thirlwall's Law; dynamic Harrod multiplier;

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References

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  1. Arslan Razmi, 2005. "Balance-of-payments-constrained growth model: the case of India," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 27(4), pages 655-687, July.
  2. Raphael Rocha Gouvêa & Gilberto Tadeu Lima, 2011. "Structural Change,Balance-of-Payments Constraint and Economic Growth: Evidence from the Multi-Sectoral Thirlwall’s Law," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting] 74, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  3. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
  4. Dillon Alleyne & Alfred A. Francis, 2008. "Balance Of Payments-Constrained Growth In Developing Countries: A Theoretical Perspective," Metroeconomica, Wiley Blackwell, vol. 59(2), pages 189-202, 05.
  5. Arslan Razmi, 2005. "Balance of Payments Constrained Growth Model: The Case of India," UMASS Amherst Economics Working Papers 2005-05, University of Massachusetts Amherst, Department of Economics.
  6. H. Sonmez Atesoglu, 1997. "Balance-of-Payments-Constrained Growth Model and Its Implications for the United States," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 327-335, April.
  7. Alberto Bagnai, 2010. "Structural changes, cointegration and the empirics of Thirlwall's law," Applied Economics, Taylor & Francis Journals, vol. 42(10), pages 1315-1329.
  8. Amitava Krishna Dutt, 2002. "Thirlwall's Law and Uneven Development," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(3), pages 367-390, April.
  9. A.P. Thirlwall, 2006. "The Structure of Production, the Balance of Payments and Growth in Developing Countries: An Essay in Memory of Mohammed Nureldin Hussain 1954–2005," African Development Review, African Development Bank, vol. 18(1), pages 98-122.
  10. Paul Turner, 1999. "The Balance of Payments Constraint and the Post 1973 Slowdown of Economic Growth in the G7 Economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 41-53.
  11. Dawn Richards Elliott & Rupert Rhodd, 1999. "Explaining growth rate differences in highly indebted countries: an extension to Thirlwall and Hussain," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1145-1148.
  12. Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
  13. Leonardo V. Vera, 2006. "The balance-of-payments—constrained growth model: a north—south approach," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(1), pages 67-92, October.
  14. Miguel A. Leon-Ledesma, 1997. "An Application of Thirlwall's Law to the Spanish Economy," Studies in Economics 9708, Department of Economics, University of Kent.
  15. M. Ansari & N. Hashemzadeh & Y. Xi, 2000. "The Chronicle of Economic Growth in Southeast Asian Countries: Does Thirlwall's Law Provide an Adequate Explanation?," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(4), pages 573-588, July.
  16. Juan Carlos Moreno-Brid, 1999. "Mexico's Economic Growth and the Balance of Payments Constraint: A cointegration analysis," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(2), pages 149-159.
  17. Jose M. Serrano Sanz & Marcela Sabate & Dolores Gadea, 1999. "Economic growth and the long run balance of payments constraint in Spain," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 8(4), pages 389-417.
  18. Luis B�Rtola & Hermes Higachi & Gabriel Porcile, 2002. "Balance-of-payments-constrained growth in Brazil: a test of Thirlwall's Law, 1890-1973," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 25(1), pages 123-140, January.
  19. Hiroaki Sasaki, 2008. "North-South Ricardian trade and growth under the balance-of-payments constraint," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(2), pages 299-324, December.
  20. A. P. Thirlwall, 1997. "Reflections on the Concept of Balance-of-Payments-Constrained Growth," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 377-385, April.
  21. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 755-774, September.
  22. A. P. Thirlwall, 1991. "Professor Krugman's 45-Degree Rule," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 14(1), pages 23-28, October.
  23. José A. Alonso & Carlos Garcimartín, 1999. "A New Approach to Balance-of-Payments Constraint: Some Empirical Evidence," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 21(2), pages 259-282, January.
  24. Robert A. Blecker, 1998. "International Competitiveness, Relative Wages, and the Balance-of-Payments Constraint," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 20(4), pages 495-526, July.
  25. Gabriel Porcile & Marcus Vinicius Dutra & Antonio J. A. Meirelles, 2007. "Technology gap, real wages, and learning in a balance-of-payments---constrained growth model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(3), pages 473-500, May.
  26. J. S. L. McCombie & A. P. Thirlwall, 1997. "The Dynamic Harrod Foreign Trade Multiplier and the Demand-orientated Approach to Economic Growth: an Evaluation," International Review of Applied Economics, Taylor & Francis Journals, vol. 11(1), pages 5-26.
  27. Gustavo Britto & John S. L. McCombie, 2009. "Thirlwall's law and the long-term equilibrium growth rate: an application to Brazil," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 32(1), pages 115-136, September.
  28. Mario García-Molina & Jeanne Kelly Ruíz-Tavera, 2009. "Thirlwall's law and the two-gap model: toward a unified "dynamic gap" model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 32(2), pages 269-290, December.
  29. Mario Cimoli & Gabriel Porcile & Sebastián Rovira, 2010. "Structural change and the BOP-constraint: why did Latin America fail to converge?," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 389-411, March.
  30. Guadalupe Fugarolas Alvarez-Ude & David Matesanz Gomez, 2008. "Long- and short-run balance of payments adjustment: Argentine economic growth constrained," Applied Economics Letters, Taylor & Francis Journals, vol. 15(10), pages 815-820.
  31. A. P. Thirl Wall, 2001. "The Relation between the Warranted Growth Rate, the Natural Rate, and the Balance of Payments Equilibrium Growth Rate," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 24(1), pages 81-88, October.
  32. Raphael Rocha Gouvêa & Gilberto Tadeu Lima, 2013. "Balance-of-payments-constrained growth in a multisectoral framework: A panel data investigation," Journal of Economic Studies, Emerald Group Publishing, vol. 40(2), pages 240-254, March.
  33. Nelson H. Barbosa Filho, 2002. "The Balance-of-payments Constraint: From Balanced Trade to Sustainable Debt," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2001-06, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
  34. H. Sonmez Atesoglu, 1993. "Balance-of-Payments-Constrained Growth: Evidence from the United States," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 15(4), pages 507-514, July.
  35. Dixon, R & Thirlwall, A P, 1975. "A Model of Regional Growth-Rate Differences on Kaldorian Lines," Oxford Economic Papers, Oxford University Press, vol. 27(2), pages 201-14, July.
  36. Juan Carlos Moreno-Brid & Esteban Pérez, 1999. "Balance-of-Payments-Constrained Growth in Central America: 1950-96," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(1), pages 131-147, October.
  37. Kevin Nell, 2003. "A 'Generalised' Version of the Balance-of-Payments Growth Model: An application to neighbouring regions," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(3), pages 249-267.
  38. Kaldor, Nicholas, 1970. "The Case for Regional Policies," Scottish Journal of Political Economy, Scottish Economic Society, vol. 17(3), pages 337-48, November.
  39. Mark Dray & A.P. Thirlwall, 2010. "The Endogeneity of the Natural Rate of Growth for a Selection of Asian Countries," Studies in Economics 1006, Department of Economics, University of Kent.
  40. Elias Soukiazis & Micaela Antunes, 2011. "Application of the balance-of-payments-constrained growth model to Portugal, 1965-2008," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 34(2), pages 353-380, January.
  41. Thomas Palley, 2003. "Pitfalls in the Theory of Growth: An application to the balance of payments constrained growth model," Review of Political Economy, Taylor & Francis Journals, vol. 15(1), pages 75-84.
  42. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
  43. Penélope Pacheco López & A. P. Thirlwall, 2006. "Trade liberalization, the income elasticity of demand for imports, and growth in Latin America," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 29(1), pages 41-61, October.
  44. Juan Carlos Moreno-Brid, 2003. "Capital Flows, Interest Payments and the Balance-of-Payments Constrained Growth Model: A Theoretical and Empirical Analysis," Metroeconomica, Wiley Blackwell, vol. 54(2-3), pages 346-365, 05.
  45. Jonathan Perraton, 2003. "Balance of Payments Constrained Growth and Developing Countries: An examination of Thirlwall's hypothesis," International Review of Applied Economics, Taylor & Francis Journals, vol. 17(1), pages 1-22.
  46. Jose Antonio Alonso, 1999. "Growth and the external constraint: lessons from the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 31(2), pages 245-253.
  47. Carlos Garcimartín & Luis Alberto Rivas & Santiago Diaz De Sarralde, 2008. "Accounting for Irish growth: a balance-of-payments-constraint approach," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 30(3), pages 409-433, April.
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