ABSTRACT
This paper applies the Thirlwall’s balance-of-payments constraint model to Brazilian economic growth in the period 1955-98, using cointegration technique. According to Thirlwall (1979THIRLWALL, A. (1979) “Balance of Payments Constraint as an Explanation of International Growth Rate Differences”. Banca Nazionale del Lavoro Quarterly Review. March, pp. 45-53.) and MacCombie and Thirlwall (1994MCCOMBIE, J. and THIRLWALL, A. (1994) Economic Growth and the Balance of Payments Constraint. London, St. Martins.) differences in long-term economic growth among countries can be explained by a demand induced theory of economic growth. The model is tested on the Brazilian economy after industrial take- off in 1955 until 1998 using the cointegration technique and a vector error correction (VEC) representation to find the dynamic responses of exports to GDP. The results show that there is a positive cointegration between growth in exports and long-term economic growth in Brazil, which support the fact external factors constraint Brazilian economic growth.
KEYWORDS:
Balance of payments constraint; growth; post Keynesian economics
