 On empirical tests of Thirlwall’s law: a reply to Professor McCombie’s rejoinderReview of Keynesian Economics, 2023, vol. 11, issue 3, 418-426 Abstract: Professor McCombie has provided a thoughtful response to my previous argument about a potential near-tautology in conventional empirical tests of Thirlwall’s law. I accept his characterization of the argument as requiring that the estimated equations must be equivalent to ‘regressions through the origin,’ which could perhaps be called a ‘statistical coincidence’ if one does not like the term ‘near-tautology.’ More importantly, tests for equality between the balance-of-payments equilibrium growth rate and the long-run average growth rate do not directly test for the adjustment mechanism that occurs in response to balance-of-payments disequilibria. Other statistical methods as well as the use of ‘historical-structural analysis’ are needed to identify whether the main adjusting variable is national income or relative prices. This Reply also defends the way balance-of-payments–constrained growth was modeled in my co-authored work with Carlos Ibarra and highlights our use of the historical-structural approach applied to Mexico. Keywords: Thirlwall’s law; balance-of-payments-constrained growth; income elasticities; near-tautology critique; income vs. price (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:elg:rokejn:v:11:y:2023:i:3:p416-426 Access Statistics for this article Review of Keynesian Economics is currently edited by Thomas Palley, MatÃas Vernengo and Esteban Pérez Caldentey More articles in Review of Keynesian Economics from Edward Elgar Publishing |
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