scholarly journals Thoughts on balance-of-payments-constrained growth after 40 years

2019 ◽  
Vol 7 (4) ◽  
pp. 554-567 ◽  
Author(s):  
A.P. Thirlwall
Keyword(s):  
Growth Rate ◽  
Exchange Rate ◽  
Dynamic Model ◽  
Terms Of Trade ◽  
Balance Of Payments ◽  
Capital Inflows ◽  
Closed Economy ◽  
Income Elasticities ◽  
Long Run

This paper considers how Thirlwall's balance-of-payments-constrained growth model has fared over the preceding 40 years. Issues dealt with include how the model fits into Harrod's closed-economy dynamic model; whether the model is a tautology; the role of the exchange rate and terms of trade in influencing the long-run growth rate, and whether capital inflows make any difference to the long-run predictions of the model. The conclusion is that it is mainly the structure of production and trade that determines the long-run growth rate of countries, within a balance-of-payments equilibrium framework, as determinants of the income elasticities of demand for exports and imports.

Technological progress, non-price factors competitiveness, and changes in trade income elasticities: empirical evidence from South Korea and Hong Kong

2020 ◽  
pp. 1-26
Author(s):  
Marco Flávio Cunha Resende ◽  
Vitor Leone ◽  
Daniele Almeida Raposo Torres ◽  
Simeon Coleman
Keyword(s):  
Growth Rate ◽  
Hong Kong ◽  
South Korea ◽  
Empirical Evidence ◽  
Technological Progress ◽  
Innovation System ◽  
Balance Of Payments ◽  
Income Elasticities ◽  
Long Run ◽  
Catch Up

In the balance-of-payments-constrained growth model literature, income elasticities (IEs) are considered as the crucial element determining a country's long-run growth rate. Although the extant literature accepts that technology matters for IEs magnitude, explanations linking technology and IEs magnitude are limited. In this paper, we make use of the National Innovation System (NIS) concept from the Evolutionary School to explain the channels through which the size of a country's IEs is influenced by the level of development of its NIS, which in turn is a channel through which the non-price competitiveness factors work. Additionally, we empirically test the hypothesis that the catch-up allowed by NIS developments achieved in South Korea and Hong Kong improved their IEs over the 1980–1995 period. Our empirical results suggest a link between the level of NIS development and the size of the IEs.

scholarly journals International Trade and Economic Misery in African Countries with Low Human Development

2021 ◽  
Vol 2 (4) ◽  
pp. 212-243
Author(s):  
Uchechukwu C. Nwogwugwu ◽  
Collins C. Umeghalu
Keyword(s):  
Growth Rate ◽  
International Trade ◽  
Exchange Rate ◽  
Trade Agreements ◽  
Balance Of Payments ◽  
Total Export ◽  
Manufacture Export ◽  
African Countries ◽  
Gdp Growth Rate ◽  
Per Capita

Puzzled by the demeaning level of poverty most African countries continue to grapple with despite their extensive participation in international trade, the study attempts to examine the encumbrances that tend to impede African countries from optimally reaping the developmental gains inherent in partaking in international trade, which seems to also worsen the economic misery the inhabitants endlessly contend with. The System Generalized Method of Moments (System-GMM) estimation technique was used in the study which involves 17 African countries and spans from 1995 - 2018. While misery index is used to measure economic misery, the impact of international trade on economic misery is captured by means of its effect via economic misery, economic growth rate, balance of payment, total export, manufacture export and exchange rate. The results of the study reveal that balance of payments, total export, manufacture export, per capita GDP growth rate, exchange rate and lagged form of economic misery all have positive effect on economic misery. While the effects of total export, manufacture export, per capita GDP growth rate, and exchange rate on economic misery are significant, those of balance of payments and lagged form of economic misery are insignificant. While the study recommends that international trade be engaged strategically such that it results in favourable balance of payments, it also encourages the discarding of obsolete trade policies such as outright bans on importation of certain commodities. Bilateral trade agreements are recommended over multilateral trade agreements, since they are more mutually beneficial and binding on the parties involved

scholarly journals The Main Determinants of Capital Inflows in Emerging Market Economies: Does the Exchange Rate Regime Matter?

2020 ◽  
Vol 6 (2) ◽  
pp. 163-167
Author(s):  
Fatma Taşdemir
Keyword(s):  
Exchange Rate ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
Capital Inflows ◽  
Emerging Market Economies ◽  
Foreign Direct Investments ◽  
Market Economies ◽  
Real Gdp ◽  
Long Run ◽  
Main Determinants

There is a bulk of literature in analyzing the impacts of exchange rate regimes (ERRs) on capital flows into emerging market economies. However, these studies mainly do not take into account integration and cointegration properties of variables. This paper aims to tackle this important issue by investigating whether ERRs matter for the impacts of the main push (global financial conditions, GFC) and pull (real GDP) factors on capital inflows into emerging market economies. We find that worsening GFC decreases all types of capital inflow except foreign direct investments in case of floating ERR. This impact is statistically significant only for portfolio inflows in case of managed ERR. The pull factor is often positive and statistically significant in determining capital inflows in the long-run only under floating ERRs. These results suggest that the long-run impacts of the main pull and push factors on capital inflows are often magnified under more flexible ERRs.

scholarly journals ARE HIGHER WAGES GOOD FOR BUSINESS? AN ASSESSMENT UNDER ALTERNATIVE INNOVATION AND INVESTMENT SCENARIOS

2018 ◽  
Vol 24 (1) ◽  
pp. 191-230 ◽  
Author(s):  
Alessandro Caiani ◽  
Alberto Russo ◽  
Mauro Gallegati
Keyword(s):  
Technological Progress ◽  
Evolutionary Economics ◽  
Middle Level ◽  
Closed Economy ◽  
Beneficial Effects ◽  
Growth Regime ◽  
Long Run ◽  
Innovation Dynamics ◽  
Macroeconomic Environment

This paper aims at investigating the interplay between inequality, innovation dynamics, and investment behaviors in shaping the long-run patterns of growth of a closed economy. By extending the analysis proposed in Caiani et al. [(2018) Journal of Evolutionary Economics], we explore the effects of alternative wage regimes under different investment and technological change scenarios. Experimental results seem to de-emphasize the role of technological progress as a possible source of greater inequality. Overall, simulation results are consistent with the predominance of a wage-led growth regime in most of the scenarios analyzed: A faster growth of low- and middle-level workers’ wages, relative to managers’, generally exert beneficial effects on the economy and allows to counteract the labor-saving effects of technological progress. Furthermore, a distribution more favorable to workers does not compromise firms’ profitability, but rather strengthen it by creating a more favorable macroeconomic environment, which encourages further innovations, stimulates investment, and sustains economic growth.

Financial Marketing-Based Role of Exchange Rate to Increase Foreign Trade in Turkey

2020 ◽  
pp. 21-46
Author(s):  
Özgür Kiyak ◽  
Bilge Afşar
Keyword(s):  
Exchange Rate ◽  
Foreign Trade ◽  
Foreign Exchange ◽  
Cointegration Analysis ◽  
Causality Analysis ◽  
Monthly Data ◽  
Decrease Rate ◽  
Long Run ◽  
Causality Relationship

This chapter tries to determine whether there is a causal relationship between exchange rate and foreign trade. The study includes monthly data between February 2003 and December 2018 including dollar foreign exchange selling rate and inflation related real exchange rate for exchange rate, and export amount, import amount, export increase/decrease rate, and import increase. Increase/decrease rate is used for foreign trade among other variables, for a total of 6 variables. According to the obtained results of Engle-Granger cointegration analysis, there is a cointegration between variables in the long run. However, according to the results of the Toda-Yamamoto causality analysis, it was understood that there is no causality relationship between exchange rate and foreign trade.

scholarly journals Capital inflows, exchange rate and agricultural output in Nigeria

2019 ◽  
Vol 5 (1) ◽  
Author(s):  
Fredrick Ikpesu ◽  
Abraham Emmanuel Okpe
Keyword(s):  
Exchange Rate ◽  
Foreign Capital ◽  
Public Capital ◽  
Capital Inflow ◽  
Capital Inflows ◽  
Private Capital ◽  
Agricultural Output ◽  
Long Run ◽  
The Government ◽  
Exchange Rate Depreciation

AbstractThe study applied the autoregressive distributed lag (ARDL) technique in investigating the effect of capital inflows and exchange rate on agricultural output in Nigeria between the periods 1981 and 2016. The technique was selected because the variables are integrated at both 1(1) and 1(0) and the sample size is considerably small. Variables used in the study are agricultural output (AO), private capital inflow (PRCI), public capital inflow (PUBCI), investment (INV), labor (L) and real effective exchange rate. Findings from the empirical research revealed that the variables are cointegrated. The research outcome also indicates that in the short run and long run, private capital inflow and public capital inflow positively affect the country agricultural output. The study also revealed that exchange rate depreciation would cause agricultural output to decline in the short and long run. Based on the research findings, it is recommended that the government should create an enabling and conducive environment to attract more inflows of foreign capital into the country to boost the agricultural output. Also, monetary authority should ensure the stability of the country’s exchange rate (Naira) since exchange rate depreciation affects agricultural output negatively. Furthermore, there is the need for the harmonization of foreign capital inflow policy and monetary policy by the government, taking into consideration the optimal level of capital inflow that will not have a detrimental effect on exchange rate so as to ensure sustainable growth in agricultural output.

scholarly journals Econometric Analysis of Determinants of Real Effective Exchange Rate in Nigeria (1960-2015)

2016 ◽  
Vol 9 (1) ◽  
pp. 62-80 ◽  
Author(s):  
Waheed Ibrahim
Keyword(s):  
Exchange Rate ◽  
Crude Oil ◽  
Terms Of Trade ◽  
Oil Price ◽  
Real Effective Exchange Rate ◽  
Crude Oil Price ◽  
Long Run ◽  
Effective Exchange ◽  
Short Run ◽  
Effective Exchange Rate

Abstract This study investigates the determinants of real effective exchange rate in Nigeria for the period between 1960 and 2015 using the vector error correction mechanism to separate long run from the short run fundamentals. The findings from the regression estimates revealed that; terms of trade, openness of the economy, net capital inflow and total government expenditure were the major long run determinants of real effective exchange rate in the country while variables such as; broad money supply (M2), nominal effective exchange rate, structural adjustment program dummy, June 12 crisis and change to civil rule dummies were revealed as the major short run determinants of exchange rate in Nigeria between 1960 and 2015. The study concludes by recommending that since the major variable of terms of trade (crude oil price) is out of the government control, the effect of shocks due to the fluctuations of crude oil price can be minimized by shifting the economy from a mono-product nation and diversify the economy to increase productive capacity. Also, the change to civil rule dummy used in the study revealed that the system has not been friendly with the country’s real effective exchange rate, thus needing to review the system and bringing out all negative activities there in to ensure Nigeria’s currency appreciation. Guided openness is also suggested to avert the danger that unguided trade liberalization may bring into the country.

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