Balance-of-payments-constrained growth in a multisectoral framework: a panel data investigation

Raphael Rocha Gouvea and Gilberto Lima

MPRA Paper from University Library of Munich, Germany

Abstract: This paper contributes to the literature on balance-of-payments-constrained growth by providing an innovative empirical evaluation of a disaggregated version of the so-called Thirlwall's Law derived from a Pasinettian multisectoral framework. After estimating sectoral elasticities of exports and imports for a considerable panel dataset of 90 countries over the period 1965-1999, we have performed two empirical exercises. First, we grouped countries together by income level and evaluated a multisectoral balance-of-payments-constrained growth model by analyzing prediction errors and mean absolute deviations. Second, we carried out a regression validity test on the results. Our main findings give support to the validity of the multisectoral version of Thirlwall's Law, providing therefore further understanding of the structural determinants of the uneven international development and guidance for the design of growth-enhancing national structural policies.

Keywords: balance-of-payments constraint; structural change; economic growth; macrodynamics (search for similar items in EconPapers)
JEL-codes: E12 F43 O11 (search for similar items in EconPapers)
Date: 2011-03
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Citations: View citations in EconPapers (6)

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