Models of Structural Change and Kaldor's Facts: Critical Survey from the Cambridge Keynesian Perspective

Kazuhiro Kurose

No 443, TERG Discussion Papers from Graduate School of Economics and Management, Tohoku University

Abstract: This study addresses the reconciliation of structural change with Kaldor's facts, which is a new research agenda in this area. The mainstream reconciliation strategy is that the facts are interpreted as a state at which the economy grows along the generalised balanced growth path and multi-sectoral models are transformed into the one-sectoral model that has the uniquely (saddle-path) stable steady state. We argue that the main- stream strategy is far from Kaldor's own thoughts and overlooks structural change in physical capital. The Cambridge Keynesian reconciliation based on Pasinetti's struc- tural dynamics demonstrates that structural change inevitably accompanies changes in socialinstitutionstomaintainfullemployment,whereasthemainstreamreconciliation is achieved entirely through the market mechanism.

Pages: 38 pages
Date: 2021-01
New Economics Papers: this item is included in nep-hme, nep-hpe and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:toh:tergaa:443

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