The rebuilding macroeconomic theory project part III: macroeconomic models of structural change

David Vines

Oxford Review of Economic Policy, 2025, vol. 41, issue 2, 223-259

Abstract: In this article I first set out a taxonomy of reasons for structural change within a macroeconomic model. There may be tipping points, either within one sector or due to strategic complementarities between sectors. There may be a process of gradual accumulation, within the model, of something that is particular to one sector which causes that sector to grow faster than other sectors. Or there may be structural changes in the economy that are external to the model whiMcKibbinch mean that the nature of the model needs to change. I use this taxonomy to help me to analyse the models of structural change that are presented in the papers in this issue of the Oxford Review of Economic Policy. First, I examine models of structural change that can occur in the process of economic growth. I then use the taxonomy to examine models of the kind of structural change that can also occur in the shorter term, as a result of the operation of stabilization policy. I also show how models can help us to understand structural change in the world economy. In addition, I examine how chaotic behaviour can cause structural change. And finally, I show how the models of structural change set out in the papers in this issue of the Oxford Review of Economic Policy can be of use to macroeconomic policy-makers.

Keywords: structural change; tipping point; Ramsey model; leading sector two-sector model; stabilization policy (search for similar items in EconPapers)
Date: 2025
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