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Application of the balance-of-payments-constrained growth model to Portugal, 1965-2008

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  • Elias Soukiazis
  • Micaela Antunes

Abstract

The present study aims to verify whether the balance-of-payments-constrained growth approach is suitable for explaining the Portuguese growth performance during the past decades. To smooth cyclical variations, 15-year overlapping periods are considered in the computation of "Thirlwall's law," assuming that income elasticity of imports is either constant or variable over time. It is shown that actual growth can accurately be predicted by the ratio of export growth to the income elasticity of the demand for imports. Evidence also reveals that Portugal grew slightly faster than the rate consistent with the balance-of-payments equilibrium accumulating external deficits over time. Considering the pre- and postaccession periods to the European Union, it is found that Portugal grew at a slower rate in the latter period, explained by a higher income elasticity of imports and lower export growth.

Suggested Citation

  • Elias Soukiazis & Micaela Antunes, 2011. "Application of the balance-of-payments-constrained growth model to Portugal, 1965-2008," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 34(2), pages 353-380.
  • Handle: RePEc:mes:postke:v:34:y:2011:i:2:p:353-380
    DOI: 10.2753/PKE0160-3477340209
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    Citations

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    Cited by:

    1. Elias Soukiazis & Pedre André Cerqueira & Micaela Antunes, 2013. "The Effects of Internal and External Imbalances on Italy´s Economic Growth. A Balance of Payments Approach with Relative Prices No Neutral," GEMF Working Papers 2013-14, GEMF, Faculty of Economics, University of Coimbra.
    2. repec:gei:jnlfer:v:2:y:2017:i:1:p:1-15 is not listed on IDEAS
    3. Elias Soukiazis & Pedro Cerqueira & Micaela Antunes, 2013. "Growth rates constrained by internal and external imbalances and the role of relative prices: empirical evidence from Portugal," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(2), pages 275-298.
    4. Elias Soukiazis & Eva Muchova, 2012. "Slovak economic growth and the consistency of the balance-of-payments constraint approach," GEMF Working Papers 2012-16, GEMF, Faculty of Economics, University of Coimbra.
    5. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208, April.
    6. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
    7. Jeanete Dias & Micaela Antunes, 2015. "Applying Thirlwall’s Law to the Portuguese economy: a sectoral analysis," GEMF Working Papers 2015-20, GEMF, Faculty of Economics, University of Coimbra.

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