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

D. Spinola

doi:10.1016/j.strueco.2020.05.007

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 journal › Article › Academic › peer-review

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 language	English
Pages (from-to)	220-232
Number of pages	13
Journal	Structural Change and Economic Dynamics
Volume	54
DOIs	https://doi.org/10.1016/j.strueco.2020.05.007
Publication status	Published - 1 Sept 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

Access to Document

10.1016/j.strueco.2020.05.007Licence: CC BY

Cite this

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

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.",

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",

author = "D. Spinola",

note = "Funding Information: I would like to acknowledge Bart Verspagen for the helpful comments and interesting debates during the development of this article. I thank UNU-Merit and the CatChain project for the institutional and financial support. I also thank to two anonymous referees for the very relevant inputs that very much improved this manuscript, and the participants of the 22nd FMM conference (October 2018), in Berlin for the relevant discussions. I bear full responsibility for any eventual errors. Publisher Copyright: {\textcopyright} 2020",

year = "2020",

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doi = "10.1016/j.strueco.2020.05.007",

language = "English",

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journal = "Structural Change and Economic Dynamics",

issn = "0954-349X",

publisher = "Elsevier",

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AU - Spinola, D.

N1 - Funding Information: I would like to acknowledge Bart Verspagen for the helpful comments and interesting debates during the development of this article. I thank UNU-Merit and the CatChain project for the institutional and financial support. I also thank to two anonymous referees for the very relevant inputs that very much improved this manuscript, and the participants of the 22nd FMM conference (October 2018), in Berlin for the relevant discussions. I bear full responsibility for any eventual errors. Publisher Copyright: © 2020

PY - 2020/9/1

Y1 - 2020/9/1

N2 - 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.

AB - 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.

KW - balance of payments constraints

KW - economic cycles

KW - endogenous technical change

KW - growth cycles

KW - innovation

KW - latin american structuralism

KW - technology

KW - terms of trade

KW - thirlwalls law

KW - Terms of trade

KW - Economic cycles

KW - INNOVATION

KW - THIRLWALLS LAW

KW - Balance of payments constraints

KW - ENDOGENOUS TECHNICAL CHANGE

KW - Latin American structuralism

KW - GROWTH CYCLES

KW - TECHNOLOGY

U2 - 10.1016/j.strueco.2020.05.007

DO - 10.1016/j.strueco.2020.05.007

M3 - Article

SN - 0954-349X

VL - 54

SP - 220

EP - 232

JO - Structural Change and Economic Dynamics

JF - Structural Change and Economic Dynamics

ER -