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Thirlwall´s law with an emphasis on the ratio of export/import income elasticities in Latin American economies during the Twentieth Century

  • Carlos Guerrero de Lizardi

    (Tecnológico de Monterrey, Campus Ciudad de México)

Using stochastic specifications that emphasize the role of the ratio of export/import income elasticities, this paper applies the balance-of-payments constraint model to nineteen Latin American countries from 1900 to 2000. The paper begins with a brief presentation of Thirlwall's well-known model. Immediately following this, we verify the existence of a long run relationship between developing economies on one hand, and the US economy on the other. To explore the short term evolution of the quantitative link between economies, a time varying model is estimated by means of an algorithm known as a Kalman filter. Mainly, the results show a diminishing the ratio of export/import income elasticities over the years, which represents an unexpected and serious feature of the new economic strategy that has already been implanted in the region.

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File URL: http://codex.colmex.mx:8991/exlibris/aleph/a18_1/apache_media/K318UQMTFDYX3U3CETLASK1AFUUJBY.pdf
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Article provided by El Colegio de México, Centro de Estudios Económicos in its journal Estudios Económicos.

Volume (Year): 21 (2006)
Issue (Month): 1 ()
Pages: 23-44

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Handle: RePEc:emx:esteco:v:21:y:2006:i:1:p:23-44
Contact details of provider: Web page: http://www.colmex.mx/centros/cee/

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  1. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 39858, Inter-American Development Bank.
  2. Perron, Pierre & Ng, Serena, 1996. "Useful Modifications to Some Unit Root Tests with Dependent Errors and Their Local Asymptotic Properties," Review of Economic Studies, Wiley Blackwell, vol. 63(3), pages 435-63, July.
  3. Graham Elliott & Thomas J. Rothenberg & James H. Stock, 1992. "Efficient Tests for an Autoregressive Unit Root," NBER Technical Working Papers 0130, National Bureau of Economic Research, Inc.
  4. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4301, Inter-American Development Bank, Research Department.
  5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
  6. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, March.
  7. 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.
  8. Kelejian, Harry H., 1982. "An extension of a standard test for heteroskedasticity to a systems framework," Journal of Econometrics, Elsevier, vol. 20(2), pages 325-333, November.
  9. Julio López G. & Alberto Cruz B., 2000. ""Thirlwall's Law" and beyond: The Latin American Experience," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 22(3), pages 477-495, April.
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