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The Balance of Payments Constraint and the Post 1973 Slowdown of Economic Growth in the G7 Economies

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  • Paul Turner

Abstract

This paper presents estimates of export and import demand functions for the G7 economies over the period 1956 to 1995 and over two sub-periods 1956-73 and 1974-95. These estimates are used to construct predictions of the equilibrium growth rates for these economies by use of the 'Thirlwall's Law' relationship. The estimates are consistent with observed cross country growth patterns over the whole sample and the post 1973 period but are less convincing in the pre 1973 sub-period. It is argued that the slowdown in economic growth after 1973 can be partly explained by the growing internationalisation of the world economy coupled with a slowdown in the overall growth of world trade.

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  • 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.
    • Handle: RePEc:taf:irapec:v:13:y:1999:i:1:p:41-53
    DOI: 10.1080/026921799101724
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    References listed on IDEAS

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    8. Robert A. Blecker, 1992. "Structural Roots of U.S. Trade Problems: Income Elasticities, Secular Trends, and Hysteresis," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 14(3), pages 321-346, March.
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    Cited by:

    1. Anthony Philip Thirlwall, 2012. "Balance of Payments Constrained Growth Models: History and Overview," Palgrave Macmillan Books, in: Elias Soukiazis & Pedro A. Cerqueira (ed.), Models of Balance of Payments Constrained Growth, chapter 1, pages 11-49, Palgrave Macmillan.
    2. A. P. Thirlwall, 2013. "Economic Growth in an Open Developing Economy," Books, Edward Elgar Publishing, number 15208, December.
    3. Guadalupe Fugarolas Alvarez-Ude & David Matesanz Gomez, 2008. "Long- and short-run balance of payments adjustment: Argentine economic growth constrained," Applied Economics Letters, Taylor & Francis Journals, vol. 15(10), pages 815-820.
    4. Khalid Abu-Ismail, 2003. "The Myth of Export-Led Growth," Working Papers 0335, Economic Research Forum, revised Nov 2003.

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