Structural breaks, reserve currency and balance of payments constrained growth: a test of Thirlwall's law in the UK (1950-2017)

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  • University of Oxford


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 in different time periods, and its growth has been constrained in 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.

Bibliographic note

Not yet published as of 07/06/2021.


Original languageEnglish
JournalApplied Economics
Publication statusAccepted/In press - 3 May 2021


  • Thirlwall's Law, Balance of payments, Reserve currency, uk, Growth

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