The balance-of-paymentsâconstrained growth model: a northâsouth approach
This paper develops a general extended version of the balance-of-payments -constrained growth model that takes into account three often ignored aspects of contemporary growth in open economiesânamely, trade imbalances and the importance of net financial flows in the long run, relative price changes caused by idiosyncratic rules of adjustment in prices, and trade and payments interdependence among asymmetric regions. We first present partial solutions for both a northern and a southern region under the key assumption of an exogenous world income growth. We show how, under specific assumptions, the solutions reduce to Thirlwall's rule. After that, we lift the small economy assumption and allow full interdependence among regions and explore the implications, over the terms of trade and the rate of growth of both regions, of changes in the rate of growth of net financial transfers. Contingent on parameters values of each region, we found that an exogenous change in the rate of growth of financial transfers may generate either a mutually reinforcing growth regime or a conflicting growth regime.
Volume (Year): 29 (2006)
Issue (Month): 1 (October)
|Contact details of provider:|| Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348|
When requesting a correction, please mention this item's handle: RePEc:mes:postke:v:29:y:2006:i:1:p:67-92. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Nguyen)The email address of this maintainer does not seem to be valid anymore. Please ask Chris Nguyen to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.