Uneven development and the balance of payments constrained model: Terms of trade, economic cycles, and productivity catching-up

D. Spinola*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

3 Citations (Web of Science)

Abstract

This paper addresses (I) the transition dynamics incompatibility between the BPCM and the Prebisch-Singer hypothesis (PSH) (II) the causes of cyclical volatility in developing countries. In order to discuss these issues, we expand the Dutt (2002) model adding: (a) a productivity gap dynamics in which the south has a catching-up element; (b) a labor market dynamics, by including a wage curve in the relationship between employment rate and economic activity; and (c) a labor supply dynamics that considers the labor transfer issue between traditional and modern sectors. The result is a four dimensional dynamic model that represents a lagged developing economy constrained by its balance of payments.
Original languageEnglish
Pages (from-to)220-232
Number of pages13
JournalStructural Change and Economic Dynamics
Volume54
DOIs
Publication statusPublished - 1 Sep 2020

JEL classifications

  • e22 - "Capital; Investment; Capacity"
  • e32 - "Business Fluctuations; Cycles"
  • o41 - One, Two, and Multisector Growth Models
  • o39 - Technological Change: Other
  • o31 - Innovation and Invention: Processes and Incentives
  • o49 - Economic Growth and Aggregate Productivity: Other

Keywords

  • balance of payments constraints
  • economic cycles
  • endogenous technical change
  • growth cycles
  • innovation
  • latin american structuralism
  • technology
  • terms of trade
  • thirlwalls law
  • Terms of trade
  • Economic cycles
  • INNOVATION
  • THIRLWALLS LAW
  • Balance of payments constraints
  • ENDOGENOUS TECHNICAL CHANGE
  • Latin American structuralism
  • GROWTH CYCLES
  • TECHNOLOGY

Cite this