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The balance of payments constrained growth rate and the natural rate of growth : new empirical evidence
| Content Provider | Semantic Scholar |
|---|---|
| Author | Lanzafame, Matteo |
| Copyright Year | 2013 |
| Abstract | This paper implements a panel approach to investigate the empirical relevance of ‘Thirlwall’s Law’, which states that long-run growth must be consistent with balance of payments (BOP) equilibrium and is, thus, determined on the demand side. Building on ARDL modelling, mean-group and pooled mean-group estimation methods, we use annual data over the 1960-2010 years for a panel of 22 OECD countries and find significant support for the ‘Law’. Next, we also explore empirically the hypothesis that the BOP-constrained growth rate ( ) B y must equal the natural (or potential) rate of growth ( ) N y and find that the data do not reject this hypothesis. Finally, we adopt a new approach, based on panel Granger-causality methods, to explore the direction of causality between B y and N y . The results indicate the existence of unidirectional long-run causality from B y to N y , thus reinforcing the view, embodied in the ‘Law’, that long-run growth is demand-determined and constrained by the BOP. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | https://mpra.ub.uni-muenchen.de/33130/1/MPRA_paper_33130.pdf |
| Alternate Webpage(s) | https://mpra.ub.uni-muenchen.de/33461/1/MPRA_paper_33461.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Advocate (person) Causality Economic Growth Endogeneity (econometrics) Kind of quantity - Equilibrium Labor (Childbirth) Organisation for Economic Co-Operation and Development Pooled Sample Relevance Robustness (computer science) Silo (dataset) Turing completeness payment |
| Content Type | Text |
| Resource Type | Article |
