The Balance of Payments Constraint as an Explanation of International Growth Rate Differences
By A. Thirlwall. 2011
1,015 citations recorded by the source corpus.
The paper shows that if long-run balance of payments equilibrium on current account is a requirement then a country's long run growth rate can be approximated by the ratio of the growth of exports to the income elasticity of demand for imports. The model fits well the experience of eighteen OECD countries. It is output, not relative prices, that adjusts the balance of payments, contrary to the neoclassical orthodoxy. Growth can be demand constained by the balance of payments.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/65958cb2d7339a8c5300c16fdacfd1b29f1b0da0
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In Economics and Econometrics
- Yana van der Meulen Rodgers
- Günseli Berik
- E. Araujo
- Elodie Mania
- Arsène Rieber
- S. Seguino
- Carmem Feijó
- Andrew Nassif
Citations in the corpus
- Product export diversification and sustainable economic growth in developing countries (2019, background): “Following Thirlwall (1979), the balance of payments equilibrium condition is written: 567 = 589 (7) Differentiating equations (5) and (6) with respect to time and incorporating the export and import growth rate expressions in equation (7) in growth rate form, we deduce the income growth rate…”
- Technology, structural change and BOP constrained growth: a structuralist toolbox (2011, neutral): “6 The relative rate of growth y y y n s is the BOP-constrained rate of growth set forth in Thirlwall’s Law8: (7) M Xy In equation (7) X is the income elasticity of the demand for exports and M is the income elasticity of the demand for imports of the South, while is the income elasticity”
- Feminist Economics of Inequality, Development, and Growth (2009, background): “Developing countries are heavily reliant on exports to finance imported intermediate and capital goods in order to relieve a balance of payments constraint to growth (A.P. Thirlwall 1979; Mark Setterfield 2006).”
- Structural change and economic development: is Brazil catching up or falling behind? (2015, methodology): “The theoretical framework of this paper is based on Kaldor (especially, 1966) and Thirlwall (1979) theories on the basic driving forces of the behaviour of productivity and economic growth in the long run.”