The Remarkable Durability of Thirlwall’s Law

Mark Setterfield

Chapter 3 in Models of Balance of Payments Constrained Growth, 2012, pp 83-110 from Palgrave Macmillan

Abstract: Abstract This chapter contemplates the robustness of Thirlwall’s Law, a parsimonious expression that relates long-run equilibrium growth in any one region to the product of world income growth and the ratio of the income elasticities of demand for exports and imports.* Various extensions of the balance of payments constrained growth model from which Thirlwall’s Law is derived are examined. In each case, Thirlwall’s Law is shown to reassert itself as a good approximation of the equilibrium growth rate. It is hypothesized that this robustness helps explain the widespread empirical success of Thirlwall’s Law.

Keywords: Real Exchange Rate; Natural Rate; Income Elasticity; Internal Constraint; Income Ratio (search for similar items in EconPapers)
Date: 2012
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Journal Article: The remarkable durability of Thirlwall's Law (2011)
Working Paper: The Remarkable Durability of Thirlwall’s Law (2011)
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DOI: 10.1057/9781137023957_4

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