Balance-of-payments-constrained growth in Brazil: a test of Thirlwall's Law, 1890-1973

Abstract

The paper offers a time-series test of Thirlwall's Law for Brazil during the 1890-1973 period. The results confirm the existence of a long-run relationship between Brazilian gross domestic product (GDP), terms-of-trade, and world income, as Thirlwall's Law predicts. In addition, an error correction model is estimated, which shows that adjusting toward Thirlwall's Law equilibrium explains a substantial part of total variation of real GDP in the short run.

Keywords:

• Brazil, Keynesian growth models
• Thirlwall&#146s Law