Balance-Of-Payments-Constrained Growth In A Multisectoral Framework: A Panel Data Investigation
This paper contributes to the literature on balance-of-payments-constrained growth by providing an innovative empirical evaluation of a disaggregated version of the so-called Thirlwall's Law derived from a Pasinettian multisectoral framework. After estimating sectoral elasticities of exports and imports for a considerable panel dataset of 90 countries over the period 1965-1999, the authors have performed two empirical exercises. First, they grouped countries together by income level and evaluated a multisectoral balance-of-payments-constrained growth model by analyzing prediction errors and mean absolute deviations. Second, they carried out a regression validity test on the results.