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The Economics of Demand Led-Growth Theory and Evidence for Brazil

  • José Luís Oreiro


    (Department of Economics, Universidade Federal do Paraná)

  • Luciano Nakabashi


    (Department of Economics, Universidade Federal do Paraná)

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, longrun 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 95% of the growth rate of real GDP in the period 1990-2005 is explained by variables at the demand side of the economy. The econometric tests also show that natural growth rate of the Brazilian economy is endogenous, being determined by the growth rate of aggregate demand.

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Paper provided by Universidade Federal do Paraná, Department of Economics in its series Working Papers with number 0070.

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Length: 23 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:fup:wpaper:0070
Note: Creation Date corresponds to the year in which the paper was published on the Department of Economics website. The paper may have been written a small number of months before its publication date.
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