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Levels of Economic Development and Harrod foreign trade

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  • Gairuzazmi Ghani

    (PEPP, University of Southern California)

Abstract

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.

Suggested Citation

  • Gairuzazmi Ghani, 2004. "Levels of Economic Development and Harrod foreign trade," International Trade 0411011, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpit:0411011
    Note: Type of Document - pdf; pages: 17
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/it/papers/0411/0411011.pdf
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    References listed on IDEAS

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    1. 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.
    2. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    3. Erkin I. Bairam, 1997. "Levels of Economic Development and Appropriate Specification of the Harrod Foreign-Trade Multiplier," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 19(3), pages 337-344, March.
    4. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    5. 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 111-125, May.
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    Cited by:

    1. Pop-Silaghi Monica Ioana, 2009. "Foreign Trade Multiplier In Romania Before And After Accession To The European Union," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 230-235, May.

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    Keywords

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    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business

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