Re: stiglitz

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

You wrote:

>
>Yes, the rate of growth of A will be below that of the rest of the world
>if country A is forced to maintain a balance of payment equilibrium. In
>your proposal A is not forced not maintain a balance of payments
>equilibrium so that the rate of growth of A need not be below that of the
>rest of the world. Correct?.


Yes.  but you keep mixing my proposal with the current system.  Under my
proposal Thirlwall's Law is no longer binding --

Paul
―---------------------------------------------
1. Exactly under your proposal Thirlwall's Law is not binding.

2. Yet you state (if I recall correctly. I don't have the reference with me right now) that under your proposal  a country cannot permanently have a balance of payments deficits. Let me explain. You mention the example of a rich country (undertakes full employment policies) and a poor country. The rich country  has 'to alter its standard of living', the poor country can receive official, debt forgiveness..etc..

3. Assume under your proposal that country A (with low income elasticity of export (say less than one) and high (say greater than one) income elasticity of imports is obviously not constrained by TH. LAw and decides to undertake expansionary policies. Assume further that ther are no import restrictions. Can't one outcome be a balance of payments disequilibrium? Can't a possibility be a persistent balance of payments disequilibrium?

What happens under your proposal to a middle income country that decides