Abstract
We apply Thirlwall’s law (Thirlwall 1979) to estimate long run growth in the UK. In particular, we develop a new test allowing for potential structural breaks based on 2SLS to remedy potential weaknesses that existed in previous methods. Our results show the UK had different balance of payments positions over different time periods, and its growth has been constrained over the past two decades. We further elaborate on the pound’s changing role as a reserve currency and how this has affected the UK’s external constraint and growth.
Original language | English |
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Pages (from-to) | 5756-5771 |
Journal | Applied Economics |
Volume | 53 |
Issue number | 50 |
Early online date | 20 Jul 2021 |
DOIs | |
Publication status | E-pub ahead of print - 20 Jul 2021 |
Bibliographical note
Publisher Copyright:© 2021 Informa UK Limited, trading as Taylor & Francis Group.
Keywords
- Thirlwall's Law
- Balance of payments
- Reserve currency
- uk
- Growth
ASJC Scopus subject areas
- Economics and Econometrics