Evaluating Thirlwall's Law: Does Country Size Matter?

Alan King ()
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Alan King: University of Otago, Department of Economics, Postal: PO Box 56, Dunedin, New Zealand, http://www.otago.ac.nz/

Economia Internazionale / International Economics, 2002, vol. 55, issue 2, 193-212

Abstract: Thirlwall’s law of balance-of-payments-constrained growth predicts that an economy’s growth rate is determined by the ratio of its income elasticities of demand for exports and imports, multiplied by the world’s growth rate. Alexander and King (1999) argue that the typically supportive empirical results found for this relationship are based on a flawed testing procedure. They find little support for Thirlwall’s law among the G7 nations using an alternative, cointegration-based approach. This study aims to see whether Alexander and King’s (1999) conclusions hold for smaller, more open economies. We find that, in most cases, they do.

Keywords: Thirlwall’s law; growth; balance of payments (search for similar items in EconPapers)
JEL-codes: F43 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0189

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