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Applying Thirlwall’s Law to the Portuguese economy: a sectoral analysis

Author

Listed:
  • Jeanete Dias

    (University of Coimbra)

  • Micaela Antunes

    (University of Coimbra Faculty of Economics / GEMF)

Abstract

International trade is definitely one of the most relevant factors when considering the economic expansion of a small country like Portugal and as such, this work analyzes the impact that the Balance of Payments can have on economic growth. For that, we apply Thirlwall’s Law. In addition, following the international economic and financial crisis of 2008, that among others, led to a fall in Private Investment and Public and Private Consumption, this work aims at verifying whether international trade can contribute to growth. Moreover, we examine whether the production structure can influence national growth, by using Thirlwall’s Multi-Sectoral Law. Furthermore, the evolution of the main exporting and importing sectors is described for the period 1994-2013 and the import and export demand functions are estimated both at an aggregated and sectoral level, in order to obtain the income elasticities that allow the computation of the Balance-of-Payments equilibrium growth rate. The results show Thirlwall’s Law is not as accurate as usual, probably due to the peculiarity of the period of analysis. In addition, the multi-sectoral perspective proves to be a better approximation to the period’s effective growth rate.

Suggested Citation

  • Jeanete Dias & Micaela Antunes, 2015. "Applying Thirlwall’s Law to the Portuguese economy: a sectoral analysis," GEMF Working Papers 2015-20, GEMF, Faculty of Economics, University of Coimbra.
    • Handle: RePEc:gmf:wpaper:2015-20.
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    References listed on IDEAS

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    Cited by:

    1. Elias Soukiazis & Micaela Antunes & Pedro André Cerqueira, 2017. "Growth adjustments through non-price competitiveness and productivity. A cumulative causation approach," CeBER Working Papers 2017-01, Centre for Business and Economics Research (CeBER), University of Coimbra.

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    More about this item

    Keywords

    Economic Growth; Income-elasticities; Thirlwall’s Law; Multi-sectoral Thirlwall’s Law;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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