Capital Deepening and Nonbalanced Economic Growth

Daron Acemoglu and Veronica Guerrieri

Journal of Political Economy, 2008, vol. 116, issue 3, pages 467-498

Abstract: We present a model of nonbalanced growth based on differences in factor proportions and capital deepening. Capital deepening increases the relative output of the more capital-intensive sector but simultaneously induces a reallocation of capital and labor away from that sector. Using a two-sector general equilibrium model, we show that nonbalanced growth is consistent with an asymptotic equilibrium with a constant interest rate and capital share in national income. For plausible parameter values, the model generates dynamics consistent with U.S. data, in particular, faster growth of employment and slower growth of output in less capital-intensive sectors, and aggregate behavior consistent with the Kaldor facts. (c) 2008 by The University of Chicago. All rights reserved..

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.journals.uchicago.edu/doi/pdf/10.1086/589523 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Capital Deepening and Non-Balanced Economic Growth (2006)
Working Paper: Capital Deepening and Non-Balanced Economic Growth (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:ucp:jpolec:v:116:y:2008:i:3:p:467-498

Ordering information: This journal article can be ordered from
http://www.journals.uchicago.edu/JPE/order1.html

Access Statistics for this article

Journal of Political Economy is edited by Steven D. Levitt, MONIKA PIAZZESI, CANICE PRENDERGAST and ROBERT SHIMER

More articles in Journal of Political Economy from University of Chicago Press
Address: The University of Chicago Press, Journals Division, P.O. Box 37005 Chicago, IL 60637
Series data maintained by Christopher F. Baum ().