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Estimates of industrial country export and import demand functions: implications for 'Thirlwall's Law'

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  • Jonathan Perraton
  • Paul Turner

Abstract

The paper presents estimates of export and import demand functions for fifteen industrial countries. To allow for common shocks use is made of the Seemingly Unrelated Regression Estimator (SURE). These estimates are then used to construct predictions of the growth rate consistent with balance of payments equilibrium along the lines of the Thirlwall hypothesis. Regressions of actual growth rates on the predicted values indicate that the hypothesis performs better when the observations are weighted by relative GDP. It is concluded that 'Thirlwall's Law' is more useful for understanding the overall growth rate of the aggregate of industrial countries than cross-country growth performance.

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  • Jonathan Perraton & Paul Turner, 1999. "Estimates of industrial country export and import demand functions: implications for 'Thirlwall's Law'," Applied Economics Letters, Taylor & Francis Journals, vol. 6(11), pages 723-727.
    • Handle: RePEc:taf:apeclt:v:6:y:1999:i:11:p:723-727
    DOI: 10.1080/135048599352295
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    References listed on IDEAS

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    1. Krugman, Paul, 1989. "Differences in income elasticities and trends in real exchange rates," European Economic Review, Elsevier, vol. 33(5), pages 1031-1046, May.
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    Cited by:

    1. Bineau, Yannick, 2008. "Équilibre extérieur et taux de change réel : apport du modèle de croissance contrainte par la balance des paiements," L'Actualité Economique, Société Canadienne de Science Economique, vol. 84(3), pages 263-285, septembre.
    2. Paul Turner, 1999. "The Balance of Payments Constraint and the Post 1973 Slowdown of Economic Growth in the G7 Economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 41-53.
    3. Gairuzazmi Ghani, 2006. "Balance of payments constrained growth model: an examination of Thirlwall's Hypothesis using McCombie's Individual Country Method," Applied Economics Letters, Taylor & Francis Journals, vol. 13(12), pages 763-768.
    4. Alberto Bagnai & Christian Alexander Mongeau Ospina, 2014. "The a/simmetrie annual macroeconometric model of the Italian economy: structure and properties," a/ Working Papers Series 1405, Italian Association for the Study of Economic Asymmetries, Rome (Italy).

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