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Balance-Of-Payments Constrained Growth: a Post-Keynesian Model with Capital Inflows

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  • Sérgio Fornazier Meirelles Filho

    (FACE-UFG, Ciências Econômicas)

  • Frederico Gonzaga Jayme Jr

    (Cedeplar/UFG)

  • Gilberto de Assis Libânio

    (Cedeplar/UFG)

Abstract

This paper proposes a brief theoretical analysis of the relationship between international capital mobility and economic growth, seen in the perspective of demand-led growth. The work comprises four sections, besides the introduction. First of all, we briefly present the central propositions that constitute the so-called demand-led growth perspective. We then review the balance-of-payments constrained growth model, as originally proposed by Thirlwall (1979), as well as subsequent efforts to incorporate capital flows into this analytical framework. Building on this theoretical structure, a model is proposed in order to study the connections between balance-of-payments constrained growth and capital controls, which is formally introduced as a macroeconomic policy variable. In the last section, we present the final remarks on this model.

Suggested Citation

  • Sérgio Fornazier Meirelles Filho & Frederico Gonzaga Jayme Jr & Gilberto de Assis Libânio, 2011. "Balance-Of-Payments Constrained Growth: a Post-Keynesian Model with Capital Inflows," Working papers - Textos para Discussao do Curso de Ciencias Economicas da UFG 026, Curso de Ciencias Economicas da Universidade Federal de Goias - FACE.
    • Handle: RePEc:ufb:wpaper:026
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    References listed on IDEAS

    as
    1. Juan Carlos Moreno-Brid, 1998. "On Capital Flows and The Balance-of-Payments-Constrained Growth Model," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 21(2), pages 283-298, December.
    2. Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
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    5. A. P. Thirlwall, 2015. "A Model of Regional Growth Rate Differences on Kaldorian Lines," Palgrave Studies in the History of Economic Thought, in: Essays on Keynesian and Kaldorian Economics, chapter 12, pages 286-301, Palgrave Macmillan.
    6. 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.
    7. Ilan Goldfajn & André Minella, 2007. "Capital Flows and Controls in Brazil: What Have We Learned?," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 349-420, National Bureau of Economic Research, Inc.
    8. Nelson H. Barbosa-Filho, 2001. "The balance-of-payments constraint:from balanced trade to sustainable debt," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 54(219), pages 381-400.
    9. Frederico Gonzaga Jayme Jr., 2003. "Balance-of-payments-constrained economic growth in Brazil," Brazilian Journal of Political Economy, Center of Political Economy, vol. 23(1), pages 63-86.
    10. J. S. L. McCombie & A. P. Thirlwall, 1994. "Economic Growth and the Balance-of-Payments Constraint," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-23121-8, December.
    11. A. P. Thirlwall, 2002. "The Nature of Economic Growth," Books, Edward Elgar Publishing, number 2579.
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    Cited by:

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    2. Graham Bird & Eric Pentecost & Yanyan Yang, 2019. "The Twin Deficits Hypothesis: An Empirical Examination," Open Economies Review, Springer, vol. 30(4), pages 759-777, September.
    3. Garcimartin, Carlos & Kvedaras, Virmantas & Rivas, Luis, 2016. "Business cycles in a balance-of-payments constrained growth framework," Economic Modelling, Elsevier, vol. 57(C), pages 120-132.

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