Balanced Growth With Structural Change

L. Rachel Ngai and Christopher Pissarides

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We study a multi-sector model of growth with differences in TFP growth rates across sectorsand derive sufficient conditions for the coexistence of a balanced aggregate growth path, withall aggregates growing at the same rate, and structural change, characterized by sectoral laborreallocation. The conditions needed are weak restrictions on the utility and productionfunctions: goods should be poor substitutes and the intertemporal elasticity of substitutionshould be one. We present evidence from US and UK sectors, that is consistent with ourconclusions and successfully calibrate the shift from agriculture to manufacturing andservices in the United States.

Keywords: structural change; balanced growth; total factor productivity (search for similar items in EconPapers)
JEL-codes: O14 O41 (search for similar items in EconPapers)
Date: 2004-04
New Economics Papers: this item is included in nep-dev
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Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Balanced growth with structural change (2004)
Working Paper: Balanced Growth with Structural Change (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0627

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