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Trade Liberalisation, the Balance of Payments and Growth in Latin America

Penelope Pacheco-Lopez () and Anthony Thirlwall ()
Authors registered in the RePEc Author Service: Penélope Pacheco López ()

Studies in Economics from School of Economics, University of Kent

Abstract: Thispaper applies the balance of payments constrained growth model to seventeen countries of Latin America over the period 1977-2002. The crucial parameter to estimate is the income elasticity of demand for imports which is done for Latin America as a whole, as well as for individual countries. As well as estimating over the whole period, the technique of rolling regressions is also used to test whether a trend increase can be discerned as a result of trade liberalisation. A trend increase is found for Latin America as a whole and for some individual countries, and the balance of payments equilibrium growth rate is a good predictor of growth performance in nine of the seventeen countries. There is no evidence that the balance of payments equilibrium growth rate has increased in Latin America as a result of trade liberalisation.

Keywords: Latin America; trade liberalisation; growth; balance of payments (search for similar items in EconPapers)
JEL-codes: C22 C23 F13 F32 F43 (search for similar items in EconPapers)
Date: 2005-09
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