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Author:Kvedaras, V.
Title:Explanation of economic growth differences in the CEE countries: importance of the BOP constraint
Journal:Baltic journal of economics
2005 : SUMMER-AUTUMN, VOL. 5:2, p. 48-67
Index terms:balance of payments
economic growth
error correction models
transition economies
Eastern Europe
Language:eng
Abstract:This article presents a balance-of-payments (BOP) constrained growth analysis of the long-run growth process in the Central and Eastern European (CEE) countries during the recovery period of transition (1995-2004). The article tests the BOP-constrained growth model, based on the specification of a dynamic import function, which describes the short-term and long-term import behaviour in a different way. McCombie and Thirlwall have implicitly argued for a similar specification of the import function in the analyses of this kind. Econometrically, the import function is formulated, in this paper, as a conditional error correction model (ECM). It is shown that even the basic BOP-constrained growth model captures well the disparity of growth rates of the gross domestic products (GDP) in the CEE countries.
SCIMA record nr: 260688
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