Abstract
This chapter seeks to verify empirically whether the Brazilian growth over the last three decades is balance-of-payments constrained or not. In order to accomplish such a task, we shall base our theoretical analysis on the Balance-of-Payments Constrained Growth Model (BPC) first developed by Thirlwall in 1979. Thirlwall’s Law claims that the home country growth compatible with the current account balance is essentially determined by its exports growth rate and its income elasticity of demand for imports ratio. Provided a constant elasticities ratio over time, in the end what we really want to evaluate is if there is any long-term relation between the Brazilian growth rate and its exports growth rate during the given period. Wherefore, we will test the cointegration hypothesis, that is, the long-run relation aforementioned, through both Johansen and Engle-Granger techniques.
I would like to thank Mariano Francisco Laplane and Rosangela Ballini for their helpful comments. The comments of the participants of the 1st World Keynes Conference, 26–29 June 2013, Izmir, Turkey, are also appreciated. I am, of course, responsible for any remaining errors and inadequacies.
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Notes
- 1.
X in rate of change is equal to dlnX/dt.
- 2.
This is the so-called Marshall-Lerner condition for a successful devaluation.
- 3.
Enders (2010).
- 4.
(1) Consistency: the estimated parameter converges in probability towards the true parameter value; (2) asymptotic normality: the estimated parameter probability distribution converges to a Gaussian normal distribution; and (3) efficiency: the estimated parameter has the lower mean squared error among all asymptotically unbiased estimators.
- 5.
Purchasing Power Parity (PPP) Converted GDP Laspeyres per worker at 2005 constant prices.
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Ribeiro, R.S.M. (2019). Balance-of-Payments Constrained Growth Model: The Brazilian Case over the Period 1980–2011. In: Grivoyannis, E. (eds) International Integration of the Brazilian Economy. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-46260-2_10
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