Template-type: ReDIF-Paper 1.0  
Author-Name: Miguel García Duch
Author-Workplace-Name: Instituto Complutense de Estudios Internacionales (ICEI), Universidad Complutense de Madrid.
Title: Balance of Payments Constrained Growth in the Eurozone: Evidence onMulti-Sector Thirlwall’s Law for a Sample of 9 Founding Euro Countries, 1992-2019
Abstract: This article examines Thirlwall's Law for a sample of 9 eurozone countries from 1992 to 2019. Thirlwall's Law states that a country's long-run growth 
	rate is determined by the ratio of its income elasticities of demand for exports and imports. Using product level data from COMTRADE, this article 
	constructs 5 main sectors based on technological intensity and estimates exports and imports equations for each sector and country in error correction 
	model form. Estimation techniques are seemingly unrelated regressions for exports and three stages least squares for imports. The results reveal significant 
	variations in the income elasticities across sectors and countries, with a strong correlation between higher elasticities for more technological sectors, 
	especially among the so-called central economies. The article concludes that Thirlwall's Law is both a strong predictor of actual growth rates and a useful 
	tool for understanding the role of external imbalances on Eurozone’s economic performance during the last decades.
Keywords: : Balance-of-Payments-Constrained Growth; Thirlwall’s Law; Multi-Sector Analysis; Current Account Imbalances; Error Correction Models. 
Classification-JEL: C30, E12, F45
Creation-Date: 2023
Length: 36 pages
Number: 2302
X-File-Ref: http://america.sim.ucm.es/repec/ucm/ref/wpaper23-02.txt
File-URL: https://www.ucm.es/icei/file/wp0223
File-Format: Application/pdf
File-Function: Full text
Handle: RePEc:ucm:wpaper:2302