Template-type: ReDIF-Paper 1.0
Author-Name: Sartorello Spinola, Danilo
Author-Email: sartorello@merit.unu.edu
Author-Workplace-Name: UNU-MERIT
Title: Uneven development and the balance of payments constrained model: Terms of 
	 trade, economic cycles, and productivity catching-up
Abstract: This paper expands the Dutt (2002) version of the Balance of Payments 
	 Constrained Model (BPCM). We question the assumption of price-neutrality 
	 and the incompatibility between the BPCM and the Prebisch-Singer 
	 hypothesis (PSH) in terms of the long-run terms-of-trade dynamics. The 
	 research focuses on three main elements: (1) the long-run behaviour of 
	 the terms of trade in a Structuralist framework. (2) The cyclical 
	 endogenous dynamics in the relationship between economic activity and 
	 income distribution à la Goodwin. (3) Productivity gap and catching-up. 
	 This article adds to the Dutt(2002) model (a) a productivity gap 
	 dynamics in which the south has a catching-up element; (b) labour market 
	 by including a Phillips Curve for the relationship between employment 
	 rate and economic activity; (c) labour supply dynamics that considers 
	 the labour transfer issue between traditional and modern sectors. We 
	 find that the Structuralist/evolutionary arguments hold in the BPCM 
	 framework with these changes.
Classification-JEL: E22, E32, O41
Keywords: Balance of Payments constrains, Terms of Trade, Economic Cycles,
	 Latin American Structuralism
Series: UNU-MERIT Working Papers
Creation-Date: 20200114
Number: 2020-003
File-URL: https://unu-merit.nl/publications/wppdf/2020/wp2020-003.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2020003