Razmi, Arslan2024-04-262024-04-26200910.7275/1066700https://hdl.handle.net/20.500.14394/22063This paper derives the balance of payments-constrained growth (BPCG) model as a special case of a three good framework that incorporates ex- portables, importables, and non-tradables. The conditions under which the canonical form of the BPCG rate can be derived are made explicit and the assumptions scrutinized. It is shown that the presence of non- tradables, substitutability between exportables and importables, and in- complete specialization in expenditure generally dampen the externally- constrained growth rate. These findings help explain why empirical esti- mates tend to overestimate the BPCG rate. Overall our findings under- score the observation that tests of the BPCG hypothesis are as much a test of the internal structure of the economy under consideration.Balance of payments-constrained growth modelnon-tradablesdemand-led growthreal exchange ratesterms of tradeEconomicsWorking Paper