The Stable Transformation Path

Francisco Buera, Joseph Kaboski, Martí Mestieri and Daniel G. O'Connor

No 27731, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Dynamic models of structural transformation are often non-stationary, precluding balanced growth path (BGP) analysis. We develop a generalization of the BGP concept that we call a Stable Transformation Path (STraP). The STraP characterizes the medium-term dynamics of the economy in a turnpike sense; it is the non-stationary path toward which the economy (quickly) con- verges from an arbitrary initial capital stock. Calibrated simulations demonstrate that these medium-term dynamics have important quantitative implications for structural transformation, investment, and growth, including slow convergence. Medium-term dynamics alone account for the observed 40% secular decline in average growth rates across stages of development.

JEL-codes: O1 O11 O14 O4 O41 (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-gro
Note: DEV EFG IFM ITI
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Citations: View citations in EconPapers (6)

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Related works:
Working Paper: The Stable Transformation Path (2022)
Working Paper: The Stable Transformation Path (2020)
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