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Examining the “Balance of Payments Stages” Hypothesis

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  • Ono Masanori

    (Department of Economics, Seikei University, 3-3-1 Kichijoji-kitamachi, Musashino-shi, Tokyo 1808633, Japan)

Abstract

This paper classifies 175 countries over a period of just 30 years according to the balance of payments stages that are frequently used in proposing a hypothesis that the stage depends on the progression in a nation’s development. Using a nonparametric estimation, this investigation demonstrates that a nation’s stage in the balance of payments has a non-monotonic relationship with its economic development and that a country at the stage of immature creditor–lender enjoys a higher GDP per capita than at any other stage in its development. Another notable finding is that a lending country produces about twice the GDP per capita that a borrowing one does and that about 25% of countries in the world lend money to the rest of the world in nearly every year.

Suggested Citation

  • Ono Masanori, 2014. "Examining the “Balance of Payments Stages” Hypothesis," Global Economy Journal, De Gruyter, vol. 14(3-4), pages 373-397, October.
    • Handle: RePEc:bpj:glecon:v:14:y:2014:i:3-4:p:25:n:4
    DOI: 10.1515/gej-2014-0016
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    2. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
    3. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    4. Reinhart, Carmen M. & Rogoff, Kenneth S., 2013. "Banking crises: An equal opportunity menace," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4557-4573.
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    More about this item

    Keywords

    GDP per capita; creditor; debtor; multiple comparisons;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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