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The remarkable durability of Thirlwall's Law

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  • Mark Setterfield

    (Department of Economics, Trinity College)

Abstract

This paper contemplates the robustness of Thirlwall's Law, a parsimonious expression that relates long run equilibrium growth in any one region to the product of world income growth and the ratio of the income elasticities of demand for exports and imports. Various extensions of the balance-of-payments-constrained growth model from which Thirlwall's Law is derived are contemplated. In each case, Thirlwall's Law is shown to reassert itself as a good approximation of the equilibrium growth rate. It is hypothesized that this robustness helps explain the widespread empirical success of Thirlwall's Law.

Suggested Citation

  • Mark Setterfield, 2011. "The remarkable durability of Thirlwall's Law," PSL Quarterly Review, Economia civile, vol. 64(259), pages 393-427.
    • Handle: RePEc:psl:pslqrr:2011:43
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    File URL: http://ojs.uniroma1.it/index.php/PSLQuarterlyReview/article/view/9406/9301
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    References listed on IDEAS

    as
    1. Miguel A. LeÛn-Ledesma & A. P. Thirlwall, 2002. "The endogeneity of the natural rate of growth," Cambridge Journal of Economics, Oxford University Press, vol. 26(4), pages 441-459, July.
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    More about this item

    Keywords

    Thirlwall's law; balance-of-payments-constrained growth; export-led growth; demand-led growth; natural rate of growth;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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