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The effects of internal and external imbalances on Romanian’s economic growth

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  • Soukiazis, Soukiazis
  • Antunes, Micaela
  • Stoian, Andreea

Abstract

This article examines the tendencies of economic growth in Romania after its transition to the market economy by employing a balance of payments approach and an extended growth model that takes into account both internal and external imbalances. The first approach is linked to the well known balance of payments constrained growth hypothesis, while the second is an extension of that model that encompasses not only external imbalances emerging from trade but also internal imbalances related to public deficit and debt, among other factors. Both approaches show that the Romanian economy is balance of payments constrained and that measures must be taken to increase the country’s competitiveness. The scenario analysis provided by the second approach reveals that the Romanian economy must improve its external competitiveness in order to achieve higher growth rates.

Suggested Citation

  • Soukiazis, Soukiazis & Antunes, Micaela & Stoian, Andreea, 2015. "The effects of internal and external imbalances on Romanian’s economic growth," MPRA Paper 63558, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:63558
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    References listed on IDEAS

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    1. Juan Carlos Moreno-Brid, 1998. "On Capital Flows and The Balance-of-Payments-Constrained Growth Model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(2), pages 283-298, December.
    2. Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
    3. Elias Soukiazis & Pedro A. Cerqueira (ed.), 2012. "Models of Balance of Payments Constrained Growth," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-02395-7.
    4. Elias Soukiazis & Pedro Cerqueira & Micaela Antunes, 2013. "Growth rates constrained by internal and external imbalances and the role of relative prices: empirical evidence from Portugal," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(2), pages 275-298.
    5. Elias Soukiazis & Eva Muchova, 2012. "Slovak economic growth and the consistency of the balance-of-payments constraint approach," GEMF Working Papers 2012-16, GEMF, Faculty of Economics, University of Coimbra.
    6. Theodore Pelagidis & Evangelia Desli, 2004. "Deficits, growth, and the current slowdown: what role for fiscal policy?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 26(3), pages 461-469.
    7. Elias Soukiazis & Eva Muchova & Pedro A. Cerqueira, 2014. "Is the Slovak Economy Doing Well? A Twin Deficit Growth Approach," GEMF Working Papers 2014-08, GEMF, Faculty of Economics, University of Coimbra.
    8. Soukiazis, Elias & Cerqueira, Pedro André & Antunes, Micaela, 2014. "Explaining Italy's economic growth: A balance-of-payments approach with internal and external imbalances and non-neutral relative prices," Economic Modelling, Elsevier, vol. 40(C), pages 334-341.
    9. Robert A. Blecker, 2009. "Long-Run Growth in Open Economies: Export-Led Cumulative Causation or a Balance-of-Payments Constraint?," Working Papers 2009-23, American University, Department of Economics.
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    Citations

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    Cited by:

    1. Elias Soukiazis & Micaela Antunes & Ioannis Kostakis, 2018. "The Greek economy under the twin-deficit pressure: a demand orientated growth approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(2), pages 215-236, March.
    2. Irfan Civcir & M. Emir Yücel, 2020. "Effects of Internal and External Imbalances and the Role of Relative Prices on Economic Growth: Evidence From Turkey," SAGE Open, , vol. 10(2), pages 21582440209, June.
    3. Elias Soukiazis & Micaela Antunes & Ioannis Kostakis, 2018. "The Greek economy under the twin-deficit pressure: a demand orientated growth approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(2), pages 215-236, March.

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    More about this item

    Keywords

    balance-of-payments equilibrium growth rate; price and income elasticities of foreign trade; internal and external imbalances; 2SLS and 3SLS regressions.;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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