Exploring the robustness of the balance of payments-constrained growth idea in a multiple good framework

Abstract

This paper derives the balance of payments-constrained growth (BPCG) model as a special case of a three good framework that incorporates exportables, importables, and non-tradables. The conditions under which the canonical form of the BPCG rate can be derived are made explicit and the assumptions scrutinized. It is shown that the presence of nontradables, substitutability between exportables and importables, and incomplete specialization in expenditure generally dampen the externallyconstrained growth rate. These …ndings help explain why empirical estimates tend to overestimate the BPCG rate. Overall our …ndings underscore the observation that tests of the BPCG hypothesis are as much a test of the internal structure of the economy under consideration.JEL Codes: F41, F43, O41

Technology Gap and the Role of National Innovation System in a Balance of Payments Constrained Growth Model: Empirical Evidence From Nigeria

“…In spite of this, recent studies, especially those on the Periphery-South, accentuate the significant function of competitive and stable RER in influencing investment decisions, exports, and consequently easing the BOP constraint on growth. Razmi (2005Razmi ( , 2011Razmi ( , 2016 specifically contends that exporters from the Periphery-South cannot compete with producers from the center-North on identical level in international trade. Whereas the center-North has succeeded in properly improving the composition of its export baskets, the Periphery-South economy like Nigeria still lags behind in diversifying its export structure.…”

How Could the South Respond to Secular Stagnation in the North?

“…If the Marshall-Lerner condition is just satisfied, only the 'weak' form of Thirlwall's law (y i = x i /g mi ) can be derived, as it no longer can be assumed that x i = g xi y à . 12 Part of the following account follows Blecker (2013) but also incorporates Moreno-Brid (1998a, 1998b and Razmi (2011Razmi ( , 2013 who themselves draw on a significant number of earlier contributions.…”

“… Part of the following account follows Blecker () but also incorporates Moreno‐Brid (, ) and Razmi (, ) who themselves draw on a significant number of earlier contributions. …”

“… Razmi () provides a detailed discussion of the algebra of these effects, though with a different focus. The spirit of assuming substitutability is similar to that in Riedel's () criticism of Lewis (). …”

Current Account Deficit and Economic Growth in Armenia

“…Research paper by Lanzafame (2013) states, that the balance of payments represents the ultimate constraint on long-run growth and give remarkable support to the Keynesian vision of economic growth as being demand-driven. Razmi (2010) emphasizes that positive trends in technological progress may hurt or help an economy that faces balance of payments constraints. The impact depends partly on the sector that the progress takes place in and partly on the structure of the economy.…”