The Economics of Demand Led-Growth: Theory and Evidence for Brazil
The objective of the present article is to present the theory of demand-led growth and some econometric evidence of the existence of a demand-led growth regime for the Brazilian economy. Initially, we will do a brief review of the theory of demand-led growth, based on Kaldor’s (1988) contribution for the theme. According to Kaldor, long-run growth is determined by the sum of the growth rate of government consumption spending and the growth rate of exports. Based on the methodology developed by Atesoglu (2002), we run some econometric tests for the hypothesis of a demand-led growth regime for the Brazilian economy. The results of the tests show that almost 85% of the growth rate of real GDP in the period 1990-2005 is explained by variables at the demand side of the economy, mainly exports growth and government consumption. However, due to the fiscal crisis of Brazil, growth can´t be led by fiscal expansion so that the only option for Brazil is to adopt an export led growth model. The econometric tests also show that natural growth rate of the Brazilian economy is endogenous, being determined by the growth rate of aggregate demand. Regarding the determinants of export growth, it is shown that the maintenance of real exchange rate at competitive levels is an important device for developing countries as Brazil.
|Date of creation:||Nov 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Universidade de Brasília UnB - Campus Universitário Darcy Ribeiro Asa Norte CEP 70910-900, Brasília, Brasil|
Fax: (61) 340-2311
Web page: http://e-groups.unb.br/face/eco/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- Engle, Robert F & Granger, Clive W J, 1987.
"Co-integration and Error Correction: Representation, Estimation, and Testing,"
Econometric Society, vol. 55(2), pages 251-76, March.
- Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
- Denis Kwiatkowski & Peter C.B. Phillips & Peter Schmidt, 1991.
"Testing the Null Hypothesis of Stationarity Against the Alternative of a Unit Root: How Sure Are We That Economic Time Series Have a Unit Root?,"
Cowles Foundation Discussion Papers
979, Cowles Foundation for Research in Economics, Yale University.
- Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
- Kwiatkowski, D. & Phillips, P.C.B. & Schmidt, P., 1990. "Testing the Null Hypothesis of Stationarity Against the Alternative of Unit Root : How Sure are we that Economic Time Series have a Unit Root?," Papers 8905, Michigan State - Econometrics and Economic Theory.
- Tom Doan, . "KPSS: RATS procedure to perform KPSS (Kwiatowski, Phillips, Schmidt, and Shin) stationarity test," Statistical Software Components RTS00100, Boston College Department of Economics.
- José Luís Oreiro & Luciano Nakabashi, 2007.
"The Economics of Demand Led-Growth Theory and Evidence for Brazil,"
0070, Universidade Federal do Paraná, Department of Economics.
- Nabakashi, Luciano & Costa da Silva, Guilherme Jonas & Oreiro, José Luis & Guimarães e Souza, Gustavo José, 2012. "The economics of demand-led growth: theory and evidence for Brazil," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
- José Luis Oreiro & Luciano Nakabashi & Guilherme Jonas & Gustavo Souza, 2010. "The Economics of Demand Led-Growth: Theory and Evidence for Brazil," Working papers - Textos para Discussao do Departamento de Economia da Universidade de Brasilia 339, Departamento de Economia da Universidade de Brasilia.
- Gilberto A. Libânio, 2009. "Aggregate demand and the endogeneity of the natural rate of growth: evidence from Latin American economies," Cambridge Journal of Economics, Oxford University Press, vol. 33(5), pages 967-984, September.
- Barbosa, Fernando de Holanda, 2005. "The contagion effect of public debt on monetary policy: the brazilian experience," Economics Working Papers (Ensaios Economicos da EPGE) 591, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- McCombie, J S L & de Ridder, J R, 1984. ""The Verdoorn Law Controversy": Some New Empirical Evidence Using U.S. State Data," Oxford Economic Papers, Oxford University Press, vol. 36(2), pages 268-84, June.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Giovanni Dosi & Keith Pavitt & Luc Soete, 1990. "The Economics of Technical Change and International Trade," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1990, August.
- J.S.L. McCombie & Mark Roberts, 2002. "The Role of the Balance of Payments in Economic Growth," Chapters, in: The Economics of Demand-Led Growth, chapter 6 Edward Elgar Publishing.
- Paulo Gala, 2008. "Real exchange rate levels and economic development: theoretical analysis and econometric evidence," Cambridge Journal of Economics, Oxford University Press, vol. 32(2), pages 273-288, March.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
- R. Dornbusch & S. Fischer & P. A. Samuelson, 1976.
"Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods,"
178, Massachusetts Institute of Technology (MIT), Department of Economics.
- Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-39, December.
When requesting a correction, please mention this item's handle: RePEc:brs:wpaper:339. 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: (Luciano Póvoa)
If references are entirely missing, you can add them using this form.