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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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