The balance-of-payments constraint on economic growth in a long-term perspective: Spain, 1850-2000

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As can be seen in Table 1, over the period 1850-1913 the estimated income elasticities for both exports and imports are rather similar in size. In turn, the real exchange rate elasticity is only significant for exports (although the coefficient is estimated with the wrong sign), but not for imports. As a result, the annual average rate of growth of the Spanish GDP shows in Table 2 a value not too different to the balance of payments-constrained growth rate for that period.

On the other hand, for the period 1940-2000 the estimated income elasticity for exports is higher than in the case of imports, whereas the real exchange rate elasticities are not significant (although the elasticity for imports is significant at the 10% level). Moreover, the actual and balance of payments-constrained growth rates look rather similar too, even though somewhat higher for the former. Accordingly, the foreign sector does not seem to have worked as a constraint on the growth of the Spanish economy over the long run, along the two subperiods 1850-1913 and 1940-2000.

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