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A multi-sectoral balance-of-payments-constrained growth model with sectoral heterogeneity

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  • Nishi, Hiroshi

Abstract

This study builds a multi-sectoral balance-of-payments-constrained growth model that incorporates structural heterogeneity between sectors and countries, such as differences in labor productivity, price competition, shares of exports and imports, and the quality of commodities. The model in the current paper generates more comprehensive results than those presented by Thirlwall (1979), Blecker (1998), and Araujo and Lima (2007), even though it contains their properties and reproduces their implications. Furthermore, compared with these existing works, the current model sheds more light on the relationship between the trade structure, international competition, productivity dynamics, and economic growth. It also shows the differences between industrial and macroeconomic phenomena, by presenting an example that illustrates how changes in nominal wages, the Kaldor–Verdoorn effect, and the degree of market competition in both countries affect economic growth in the home country.

Suggested Citation

  • Nishi, Hiroshi, 2016. "A multi-sectoral balance-of-payments-constrained growth model with sectoral heterogeneity," Structural Change and Economic Dynamics, Elsevier, vol. 39(C), pages 31-45.
  • Handle: RePEc:eee:streco:v:39:y:2016:i:c:p:31-45
    DOI: 10.1016/j.strueco.2016.06.002
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    References listed on IDEAS

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    Cited by:

    1. Mark Setterfield & Selen Ozcelik, 2017. "Is the balance of payments constrained growth rate time-varying? Exchange rate over valuation, policy-induced recessions, deindustrialization, and long run growth," Working Papers 1726, New School for Social Research, Department of Economics.
    2. repec:gei:jnlfer:v:2:y:2017:i:1:p:1-15 is not listed on IDEAS

    More about this item

    Keywords

    Multi-sectoral Thirlwall's law; International competition; Structural heterogeneity;

    JEL classification:

    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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