Economic growth and foreign liquidity in Brazil after 1970

Vol. 30 No. 2 (2010)

Apr-Jun / 2010
Published April 1, 2010
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Vieira, Fabrício de Assis C., and Márcio Holland. 2010. “Economic Growth and Foreign Liquidity in Brazil After 1970”. Brazilian Journal of Political Economy 30 (2):233-53.

Economic growth and foreign liquidity in Brazil after 1970

Fabrício de Assis C. Vieira
Doutorando em Teoria Econômica pelo Centro de Desenvolvimento e Planejamento Regional (Cedeplar) da Universidade Federal de Minas Gerais (UFMG).
Márcio Holland
Professor da Escola de Economia de São Paulo da Fundação Getulio Vargas (FGV‑EESP). O autor agradece o generoso suporte financeiro do CNPq.
Brazilian Journal of Political Economy, Vol. 30 No. 2 (2010), Apr-Jun / 2010, Pages 233-253


This paper assesses the relationship between the capital account and the Brazilian economic growth according to balance-of-payments constraint approach. The Thirlwall (1979)’s simple rule is extended to take into consideration capital account and several empirical evidence using time series analysis are shown. Conversely to the simple rule when fitted rates of balance-of-payment equilibrium economic growth average bellow the observed ones, fitted rates of growth using the rule extended to international liquidity are consistently greater than the observed ones. It is fair to conclude that, first, the Brazilian economy grows better during abundant international liquidity and, second, the economy sub utilizes such advantage growing far less than it could grow.

JEL Classification: E32; O16; C32.

Keywords: economic growth international liquidity Thirlwall law Brazilian economy