Re: stiglitz

["Esteban Perez" <eperez@xxxxxxxxxxxx>]

>>> Paul Davidson <pdavidson@xxxxxxx> 09/08/03 03:00pm >>>

The example below is not quite correct.  What you are trying to do is use
Thirlwall's Law -- which says that if the rest of the world's income
elasticity for  country A's exports  is less than the country A's income
elasticity of  demand  for imports from the rest of the world, then country
A's rate of growth that will maintain a balance of payments equilibrium
will be less than the rate of growth of of income of the rest of the
world!  So your conclusion is not correct.
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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?.