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Explaining growth rate differences in highly indebted countries: an extension to Thirlwall and Hussain

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  • Dawn Richards Elliott
  • Rupert Rhodd

Abstract

In recent years, growth rate differences have increased and have elicited numerous explanations. Among the most controversial interpretations is that postulated by Thirlwall (1979) and later extended by Thirlwall and Hussain (1982), both papers arguing that growth rate differences are best explained by demand constraints found in the balance of payments. Although the inclusion of capital flows by Thirlwall and Hussain (1982) is widely viewed as an improvement in the original model, still we believe the model to be less than complete because it omitted the effect of debt servicing. Extending the model to include the effect of debt servicing, this paper improves the predictability of the original model as it brought the actual growth rates closer to the predicted growth rates for most of the countries used in the previous research.

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  • Dawn Richards Elliott & Rupert Rhodd, 1999. "Explaining growth rate differences in highly indebted countries: an extension to Thirlwall and Hussain," Applied Economics, Taylor & Francis Journals, vol. 31(9), pages 1145-1148.
  • Handle: RePEc:taf:applec:v:31:y:1999:i:9:p:1145-1148
    DOI: 10.1080/000368499323634
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    Cited by:

    1. AfDB AfDB, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 2289, African Development Bank.
    2. Gökçe, Atilla & Çankal, Erhan, 2013. "Balance-of-payments constrained growth model for the Turkish economy," Economic Modelling, Elsevier, vol. 35(C), pages 140-144.
    3. Arevilca Vasquez, Bismarck Javier & Risso Charquero, Adrian Winston, 2007. "Balance of Payments Constrained Growth Model: Evidence for Bolivia 1953-2002," MPRA Paper 5685, University Library of Munich, Germany.
    4. Riera Prunera, Maria Carmen, 2000. "A Role For Deficit In Economic Growth," ERSA conference papers ersa00p335, European Regional Science Association.
    5. Ricardo Azevedo Araujo & Gilberto Tadeu Lima, 2007. "A structural economic dynamics approach to balance-of-payments-constrained growth," Cambridge Journal of Economics, Oxford University Press, vol. 31(5), pages 755-774, September.
    6. Parikh, Ashok & Stirbu, Corneliu, 2004. "Relationship between Trade Liberalisation, Economic Growth and Trade Balance : An Econometric Investigation," HWWA Discussion Papers 282, Hamburg Institute of International Economics (HWWA).
    7. Thilak Ranaweera, 2004. "Ghost of the financing gap: an overlooked aspect of the aid debate," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(4), pages 637-652.
    8. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208.
    9. Eduardo Loría, 2001. "La restricción externa dinámica al crecimiento de México a través de las propensiones del comercio, 1970-1999," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 16(2), pages 227-251.
    10. Nureldin Hussain & Bernard Gunter, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 210, African Development Bank.
    11. Garcimartin, Carlos & Kvedaras, Virmantas & Rivas, Luis, 2016. "Business cycles in a balance-of-payments constrained growth framework," Economic Modelling, Elsevier, vol. 57(C), pages 120-132.
    12. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
    13. repec:erv:contri:y:2015:i:2016-04:08 is not listed on IDEAS
    14. AfDB AfDB, 2005. "Working Paper 75 - External Shocks and the HIPC Initiative: Impacts on Growth and Poverty in Africa," Working Paper Series 2209, African Development Bank.
    15. Alex Luiz Ferreira, 2007. "On the Transmission Mechanism of Monetary Constraints to the Real Side of the Economy," International Review of Applied Economics, Taylor & Francis Journals, vol. 21(1), pages 43-54.
    16. Luciano Ferreira Gabriel & Fabrício Missio, 2016. "Sistema Nacional De Inovação Em Um Modelo Com Restrição Externa," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 083, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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