Exchange Rate, Income Distribution and Technical Change in a Balance-of-Payments Constrained Growth Model

This article develops a formal model that accounts for the net effect of an exchange rate devaluation on the long-term balance-of-payments constrained growth rate. Such a model investigates how a currency devaluation impacts on the home country non-price competitiveness via changes in income distribution and the rate of technological innovation. The model is built upon two plausible hypotheses. First, it is assumed that the rate of technological innovation is directly related to the income elasticity of demand for exports and inversely related to the income elasticity of demand for imports. Second, it is assumed that a redistribution of income between labor and capital has an ambiguous direct impact on the income elasticities ratio. The model shows that the net impact of a currency devaluation on growth can go either way depending on the institutional framework of the economy.This is the author accepted manuscript. The final version is available from Taylor & Francis via http://dx.doi.org/10.1080/09538259.2016.120581

Does real exchange rate undervaluation really promote economic growth?

This article seeks to reassess the empirical literature on real exchange rate misalignment and growth in light of the extensive discussion about the relationship between income distribution and growth in developing economies. We state that the dynamic relationship between changes in the real exchange rate and output growth can be characterized by two conflicting partial effects, as follows: i) undervaluation promotes growth-enhancing changes in the productive structure of the economy by stimulating technological progress and knowledge spillovers, thus affecting positively output growth; ii) undervaluation raises income inequality and hence harms output growth. Though there are a vast number of empirical studies presenting robust evidence of a positive relationship between currency undervaluation and growth for developing economies, none has yet explicitly considered the potentially negative distributional effects of undervaluation on growth. Our empirical model adds to this literature by suggesting that, once both functional income distribution and the level of technological capabilities as relevant features of the structure of the economy are explicitly taken into account, the direct impact of real exchange rate misalignment on growth becomes statistically non-significant for a representative sample of developing countries. Further, based on our results, we state that the real exchange rate only affects growth indirectly through its impacts on functional income distribution and technological innovation. Our estimates have shown that the indirect impact of undervaluation on growth in developing countries is negatively signed. The results are robust to accounting for reverse causality through GMM-system analysis, using lagged observations in difference and level of endogenous variables as instruments

A reconciliation proposal of demand-driven growth models in open economies

Purpose The purpose of this paper is to contribute to the literature on demand-driven Keynesian growth in open economies by developing a formal model that combines Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model into a more general specification. Then, based on the model developed in this paper, the authors analyse more broadly some important issues concerning the net impact of currency depreciation on the short-run growth. Design/methodology/approach The authors build upon Dixon and Thirlwall’s (1975) export-led growth model and Thirlwall’s (1979) balance-of-payments constrained growth model in order to develop the theoretical framework. The authors also run numerical simulations to illustrate the net impact of devaluation on the short-run growth rate in different scenarios. Findings The authors demonstrate that the net impact of currency devaluation on growth can go either way, depending on some structural conditions such as the average share of imported intermediate inputs in prime costs of domestic firms and the institutional capacity of trade unions to set nominal wages through the bargaining process. The model also shows that the effectiveness of a competitive real exchange rate to promote growth is higher in countries where the share of labour in domestic income is also higher. Research limitations/implications This paper provides a coherent formal starting-point for further theoretical developments on the interrelatedness between currency devaluation, income distribution and growth. These findings provide empirically testable hypothesis for future research. Originality/value The present study proposes an alternative formal solution for the theoretical problem of imposing a balance-of-payments constraint on the process of cumulative causation often incorporated in Kaldorian growth models. In terms of policy, the framework sheds further light on the relevance of income distribution and the labour market institutional framework for the dynamics of the exchange rate pass-through mechanism and allows us to map out related conditions under which currency devaluation can promote growth. Brazil, Ministry of Education, CAPESThis is the author accepted manuscript. The final version is available from Emerald Group Publishing via https://doi.org/10.1108/JES-12-2015-024

Diagnóstico e tratamento de aneurisma da artéria isquiática persistente: relato de caso e revisão da literatura Diagnosis and treatment of persistent sciatic artery aneurysm: case report and review of the literature

A persistência da artéria isquiática é uma variação anatômica rara cujo curso clínico é potencialmente grave, pois o diagnóstico ocorre quando já estão presentes complicações clínicas. Essas complicações advêm do fato de a parede da artéria isquiática ter uma tendência à degeneração ateromatosa com formação aneurismática, podendo evoluir para uma oclusão ou para um tromboembolismo. Este artigo relata o caso de um paciente do sexo feminino, com queixas de dor intensa secundária a compressão extrínseca do nervo isquiático pela dilatação aneurismática no membro inferior direito e pulsatilidade na nádega ipsilateral, apresentando uma massa hiperpulsátil nessa localização. Foi realizado exame angiográfico, que revelou persistência da artéria isquiática à direita, do tipo completo e com aneurisma. A paciente foi submetida a procedimento cirúrgico, sendo utilizada uma abordagem transglútea, e uma prótese de dácron terminoterminal foi interposta entre os colos proximal e distal do aneurisma. Os aspectos técnicos e revisão da literatura sobre o diagnóstico e a terapêutica dessa variação anatômica são discutidos neste trabalho.<br>Persistent sciatic artery is a rare anatomical variation whose clinical course is potentially serious, since diagnosis is performed when clinical complications are already present. Such complications are a consequence of the fact that sciatic artery walls have a tendency to atherosclerotic degeneration with aneurysmal formation and may evolve to occlusive thrombosis or to thromboembolism. This article reports the case of a female patient with complaint of intense pain secondary to extrinsic compression of the sciatic nerve by aneurysmal dilatation of the right lower member and hyperpulsatile ipsilateral buttock. Angiographic examination was carried through, showing complete persistent sciatic artery to the right lower member with an aneurysm. The patient was submitted to a surgical procedure using a transgluteal approach and a termino-terminal Dacron graft was interposed between the proximal and distal necks of the aneurysm. The technical aspects and review of literature on diagnosis and therapeutic approach of this anatomical variation are discussed in this work