The BPCG model provides an interesting hypothesis regarding economic growth. The main implication is that world demand places a constraint on individual country performance. I discuss this implication and argue that tests of the BPCG model have essentially been tests of the hypothesis that trade...

In this paper we analyse how the terms of trade (TOT) – the ratio of export prices to import prices – affect total factor productivity (TFP). We provide empirical macroeconomic evidence for the European Union countries based on the times series SVAR analysis and microeconomic evidence based...

This paper derives the balance of payments-constrained growth (BPCG) model as a special case of a three good framework that incorporates exportables, importables, and non-tradables. The conditions under which the canonical form of the BPCG rate can be derived are made explicit and the...

Three decades have passed since China dramatically opened up to the global market and began to catch up rapidly with leading economies. In this paper we discuss the effects of China's opening-up and rapid growth on the welfare of both China and the rest of the world (ROW). We find that the...

Does an improvement in growth prospects lead to a fall in the trade balance? The relevance of this question stems from the tendency for countercyclical fluctuations in the trade balance stressed by both the academic literature and policymakers. However, we do not find that improved growth...

Does an improvement in growth prospects lead to a fall in the trade balance? The relevance of this question stems from the tendency for countercyclical fluctuations in the trade balance stressed by both the academic literature and policymakers. However, we do not find that improved growth...

The volume index of GDP reflects the change in real income generated by production, which differs from the change in real domestic income (RGDI) available consumption and investment in case of movements in the terms of trade (ToT). If the ToT improve (the price index of exports is above that of...

This paper shows that regional trade integration shifts the burden of the exchange rate adjustment towards the less integrated trading partners. Thus, they bear the cost of trade balance expansion, while competitive exchange rate moves vis-a-vis RTA trading partners result in no expansion or...

This paper shows that a regional bias resulting from trade integration alters the transmission of a countryś monetary policy by shifting the burden of the exchange rate adjustment towards the less integrated trading partners. I first develop a simple model which illustrates how a concentration...

We analyse in this paper the relationship between international trade and economic growth from the point of view of one of the most traditional hypotheses within this field, namely, the export-led growth hypothesis, for the case of Spain in a long-term perspective of almost 170 years. Exports...