Balance-of-payments-constrained growth and convergence: one more piece of the jigsaw

Carlos Garcimartín, José Alonso and Luis Rivas

Journal of Post Keynesian Economics, 2014, vol. 36, issue 3, 555-585

Abstract: Broadly speaking, the balance-of-payments-constraint hypothesis as developed by Thirlwall (1979) has been empirically supported. Yet, it fails to interpret correctly the necessary conditions for convergence. Although the neoclassical explanation of economic growth is not necessarily the correct one, it is a fact that some countries have indeed converged to others. When Thirlwall's model accounts for the possibility of convergence, it shows two main puzzling implications since it depends on income elasticities. First, a higher income elasticity to exports/imports ratio in backward countries not only implies convergence but divergence in the long run. Second, the non-price competitiveness is higher in the backward countries since they have a higher ratio. This study aims at developing a model that is able to reconcile the balance-of-payments-constraint hypothesis with convergence. Subsequently, it is applied to countries of the Organization for Economic Cooperation and Development (OECD).

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.2753/PKE0160-3477360308 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:36:y:2014:i:3:p:555-585

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MPKE20

DOI: 10.2753/PKE0160-3477360308

Access Statistics for this article

More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().