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Balance-Of-Payments Constrained Growth: a Post-Keynesian Model with Capital Inflows

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  • Sérgio Fornazier Meirelles Filho

    (FACE-UFG, Ciências Econômicas)

  • Frederico Gonzaga Jayme Jr

    (Cedeplar/UFG)

  • Gilberto de Assis Libânio

    (Cedeplar/UFG)

Abstract

This paper proposes a brief theoretical analysis of the relationship between international capital mobility and economic growth, seen in the perspective of demand-led growth. The work comprises four sections, besides the introduction. First of all, we briefly present the central propositions that constitute the so-called demand-led growth perspective. We then review the balance-of-payments constrained growth model, as originally proposed by Thirlwall (1979), as well as subsequent efforts to incorporate capital flows into this analytical framework. Building on this theoretical structure, a model is proposed in order to study the connections between balance-of-payments constrained growth and capital controls, which is formally introduced as a macroeconomic policy variable. In the last section, we present the final remarks on this model.

Suggested Citation

  • Sérgio Fornazier Meirelles Filho & Frederico Gonzaga Jayme Jr & Gilberto de Assis Libânio, 2011. "Balance-Of-Payments Constrained Growth: a Post-Keynesian Model with Capital Inflows," Working papers - Textos para Discussao do Curso de Ciencias Economicas da UFG 026, Curso de Ciencias Economicas da Universidade Federal de Goias - FACE.
    • Handle: RePEc:ufb:wpaper:026
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    References listed on IDEAS

    as
    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. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
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    4. Mark Setterfield (ed.), 2002. "The Economics of Demand-Led Growth," Books, Edward Elgar Publishing, number 1864.
    5. A. P. Thirlwall, 2015. "A Model of Regional Growth Rate Differences on Kaldorian Lines," Palgrave Studies in the History of Economic Thought, in: Essays on Keynesian and Kaldorian Economics, chapter 12, pages 286-301, Palgrave Macmillan.
    6. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.
    7. Ilan Goldfajn & André Minella, 2007. "Capital Flows and Controls in Brazil: What Have We Learned?," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 349-420, National Bureau of Economic Research, Inc.
    8. Nelson H. Barbosa-Filho, 2001. "The balance-of-payments constraint:from balanced trade to sustainable debt," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 54(219), pages 381-400.
    9. Frederico Gonzaga Jayme Jr., 2003. "Balance-of-payments-constrained economic growth in Brazil," Brazilian Journal of Political Economy, Center of Political Economy, vol. 23(1), pages 63-86.
    10. J. S. L. McCombie & A. P. Thirlwall, 1994. "Economic Growth and the Balance-of-Payments Constraint," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-23121-8.
    11. A. P. Thirlwall, 2002. "The Nature of Economic Growth," Books, Edward Elgar Publishing, number 2579.
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    Cited by:

    1. Kvedaras, Virmantas & Garcimartín, Carlos & Astudillo, Jhonatan, 2020. "Balance-of-Payments constrained growth dynamics: An empirical investigation," Economic Modelling, Elsevier, vol. 89(C), pages 232-244.
    2. Graham Bird & Eric Pentecost & Yanyan Yang, 2019. "The Twin Deficits Hypothesis: An Empirical Examination," Open Economies Review, Springer, vol. 30(4), pages 759-777, September.
    3. Garcimartin, Carlos & Kvedaras, Virmantas & Rivas, Luis, 2016. "Business cycles in a balance-of-payments constrained growth framework," Economic Modelling, Elsevier, vol. 57(C), pages 120-132.

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