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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

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  • Carlos Guerrero de Lizardi

    (Tecnológico de Monterrey, Campus Ciudad de México)

Abstract

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.

Suggested Citation

  • Carlos Guerrero de Lizardi, 2006. "Thirlwall´s law with an emphasis on the ratio of export/import income elasticities in Latin American economies during the Twentieth Century," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 21(1), pages 23-44.
  • Handle: RePEc:emx:esteco:v:21:y:2006:i:1:p:23-44
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    File URL: http://estudioseconomicos.colmex.mx/archivo/EstudiosEconomicos2006/23-44.pdf
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    References listed on IDEAS

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    1. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    2. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4301, Inter-American Development Bank, Research Department.
    3. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
    4. Pierre Perron & Serena Ng, 1996. "Useful Modifications to some Unit Root Tests with Dependent Errors and their Local Asymptotic Properties," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 435-463.
    5. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    6. 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.
    7. Moreno Brid, Juan Carlos & Pérez Caldentey, Esteban, 2003. "Liberalización comercial y crecimiento económico en Centroamérica," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    8. Perron, Pierre & Rodriguez, Gabriel, 2003. "GLS detrending, efficient unit root tests and structural change," Journal of Econometrics, Elsevier, vol. 115(1), pages 1-27, July.
    9. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    10. Julio López G. & Alberto Cruz B., 2000. "“Thirlwall’s Law” and Beyond: The Latin American Experience," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 22(3), pages 477-495, March.
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    Cited by:

    1. Isaac, Sánchez Juárez, 2011. "Una interpretación sobre el bajo crecimiento económico en México
      [One interpretation of the low economic growth in Mexico]
      ," MPRA Paper 38101, University Library of Munich, Germany.
    2. Julen Berasaluce & José Romero, 2017. "Economic growth and the external sector: Evidence from Korea, lessons for Mexico," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 32(1), pages 95-131.

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