The Remarkable Durability of Thirlwall’s Law
PSL Quarterly Review, Forthcoming
35 Pages Posted: 2 May 2012 Last revised: 4 May 2012
There are 2 versions of this paper
The Remarkable Durability of Thirlwall’s Law
Date Written: December 15, 2011
Abstract
This paper contemplates the robustness of Thirlwall’s Law, a parsimonious expression that relates long run equilibrium growth in any one region to the product of world income growth and the ratio of the income elasticities of demand for exports and imports. Various extensions of the balance-of-payments-constrained growth model from which Thirlwall’s Law is derived are contemplated. In each case, Thirlwall’s Law is shown to reassert itself as a good approximation of the equilibrium growth rate. It is hypothesized that this robustness helps explain the widespread empirical success of Thirlwall’s Law.
Keywords: Thirlwall’s law, balance-of-payments-constrained growth, export-led growth, demand-led growth, natural rate of growth
JEL Classification: O41, E12
Suggested Citation: Suggested Citation