Balance of payments constrained growth models: history and overview

Anthony Thirlwall

PSL Quarterly Review, 2011, vol. 64, issue 259, 307-351

Abstract: Thirlwall's 1979 balance of payments constrained growth model predicts that a country's long run growth of GDP can be approximated by the ratio of the growth of real exports to the income elasticity of demand for imports assuming negligible effects from real exchange rate movements. The paper surveys developments of the model since then, allowing for capital flows, interest payments on debt, terms of trade movements, and disaggregation of the model by commodities and trading partners. Various tests of the model are discussed, and an extensive list of papers that have examined the model is presented.

Keywords: Balance of payments; growth; Thirlwall's Law; dynamic Harrod multiplier (search for similar items in EconPapers)
JEL-codes: F32 F40 F43 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (146)

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Chapter: Balance of Payments Constrained Growth Models: History and Overview (2012)
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