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Levels of Economic Development and the Harrod Foreign Trade

Listed author(s):
  • Gairuzazmi Ghani

    (USC)

Registered author(s):

    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 the dynamic Harrod foreign trade multiplier. We show that there is an inverted U-shape relation, as predicted by Thirlwall (1997), contrary to Bairam (1993, 1997). The absence of an inverse relation between levels of economic development and the dynamic Harrod foreign trade multiplier means that Thirlwall's law implies divergence.

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    File URL: http://econwpa.repec.org/eps/it/papers/0501/0501008.pdf
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    Paper provided by EconWPA in its series International Trade with number 0501008.

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    Length: 20 pages
    Date of creation: 25 Jan 2005
    Date of revision: 26 Jun 2005
    Handle: RePEc:wpa:wuwpit:0501008
    Note: Type of Document - pdf; pages: 20
    Contact details of provider: Web page: http://econwpa.repec.org

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    1. Robert J. Barro, 1998. "Determinants of Economic Growth: A Cross-Country Empirical Study," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262522543, July.
    2. Sala-i-Martin, Xavier X, 1996. "The Classical Approach to Convergence Analysis," Economic Journal, Royal Economic Society, vol. 106(437), pages 1019-1036, July.
    3. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    4. 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.
    5. 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.
    6. 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.
    7. Lant Pritchett, 1997. "Divergence, Big Time," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 3-17, Summer.
    8. 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.
    9. 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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