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A Reassessment Of Balance Of Payments Constrained Growth: Results From Panel Unit Root And Panel Cointegration Tests

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  • Dimitris Christopoulos
  • EFthymios Tsionas

Abstract

The paper reassesses the empirical evidence for Thirlwall's law in seven industrial countries by using panel unit root and panel cointegration tests including Johansen maximum likelihood cointegration tests. Current practice restricts attention to time series residual based cointegration tests, which are known to have low power and are subject to normalization problems. Since economic time series are typically short, it is desirable to exploit panel data in order to draw sharper inferences. The empirical results reveal that imports are cointegrated with terms of trade and income (although residual-based tests indicate the opposite). We find that, with the exception of Australia, Thirlwall's law holds. [C22, C23, O40, O57]

Suggested Citation

  • Dimitris Christopoulos & EFthymios Tsionas, 2003. "A Reassessment Of Balance Of Payments Constrained Growth: Results From Panel Unit Root And Panel Cointegration Tests," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 39-54.
    • Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:39-54
    DOI: 10.1080/10168730300000003
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    References listed on IDEAS

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    Cited by:

    1. Polemis, Michael L. & Fotis, Panagiotis N., 2014. "The taxation effect on gasoline price asymmetry nexus: Evidence from both sides of the Atlantic," Energy Policy, Elsevier, vol. 73(C), pages 225-233.
    2. repec:gei:jnlfer:v:2:y:2017:i:1:p:1-15 is not listed on IDEAS
    3. Irene Fafaliou & Michael Polemis, 2013. "Competitiveness of the Euro Zone Manufacturing: A Panel Data Analysis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(1), pages 45-61, February.
    4. Fotis, Panagiotis & Polemis, Michael, 2018. "Sustainable development, environmental policy and renewable energy use: A dynamic panel data approach," MPRA Paper 85018, University Library of Munich, Germany.
    5. Maja Kadievska-Vojnovic & Danica Unevska, 2007. "Price and Income Elasticities of Export and Import and Economic Growth in the case of the Republic of Macedonia," Working Papers 2007-01, National Bank of the Republic of Macedonia.
    6. Polemis, Michail & Fotis, Panagiotis, 2011. "The gasoline Industry in European Union and the USA," MPRA Paper 35097, University Library of Munich, Germany.
    7. Polemis, Michael L., 2016. "New evidence on the impact of structural reforms on electricity sector performance," Energy Policy, Elsevier, vol. 92(C), pages 420-431.
    8. Raphael Rocha Gouvêa & Gilberto Tadeu Lima, 2013. "Balance-of-payments-constrained growth in a multisectoral framework: A panel data investigation," Journal of Economic Studies, Emerald Group Publishing, vol. 40(2), pages 240-254, May.
    9. 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.
    10. Polemis, Michael L. & Fotis, Panagiotis N., 2013. "Do gasoline prices respond asymmetrically in the euro zone area? Evidence from cointegrated panel data analysis," Energy Policy, Elsevier, vol. 56(C), pages 425-433.
    11. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208.
    12. Hsiao, Frank S.T. & Hsiao, Mei-Chu W., 2006. "FDI, exports, and GDP in East and Southeast Asia--Panel data versus time-series causality analyses," Journal of Asian Economics, Elsevier, vol. 17(6), pages 1082-1106, December.
    13. repec:kap:iaecre:v:19:y:2013:i:1:p:45-61 is not listed on IDEAS
    14. Anthony P. Thirlwall, 2011. "Balance of payments constrained growth models: history and overview," PSL Quarterly Review, Economia civile, vol. 64(259), pages 307-351.
    15. Hsiao, Frank S. T. & Hsiao, Mei-Chu W., 2004. "The chaotic attractor of foreign direct investment--Why China?: A panel data analysis," Journal of Asian Economics, Elsevier, vol. 15(4), pages 641-670, August.
    16. repec:eee:eneeco:v:66:y:2017:i:c:p:69-84 is not listed on IDEAS

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