Levels of Economic Development and Harrod foreign trade
Estimates of export and import demand functions for ninety countries using Stock and Watson (1993) Dynamic OLS are presented. These estimates are then used to examine the relationship between levels of economic development and Harrod foreign trade multiplier. We show that there is an inverted U relations, as predicted by Thirlwall (1997), contrary to Bairam (1997, 1993). Absence of inverse relation between levels of economic development and Harrod foreign trade multiplier imply that Thirlwall's law does not imply convergence.
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- Stock, James H & Watson, Mark W, 1993.
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- James H. Stock & Mark W. Watson, 1991. "A simple estimator of cointegrating vectors in higher order integrated systems," Working Paper Series, Macroeconomic Issues 91-3, Federal Reserve Bank of Chicago.
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- Anthony P. Thirlwall, 2011.
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Economia civile, vol. 64(259), pages 429-438.
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- Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
- Erkin I. Bairam, 1997. "Levels of Economic Development and Appropriate Specification of the Harrod Foreign-Trade Multiplier," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(3), pages 337-344, April.
- Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-25, May.
- 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.
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