The effect of demand-driven structural transformations on growth and technological change

André Lorentz, Tommaso Ciarli, Maria Savona () and Marco Valente

Journal of Evolutionary Economics, 2016, vol. 26, issue 1, 219-246

Abstract: The paper analyses the effect of the dynamics of consumption preferences on the dynamics of macro–economic growth. We endogenously derive micro–dynamics of consumption behavior as a result of the increase in the number of income classes. The different degrees of inertia in the adjustment of consumption levels to income changes affect firm selection and the dynamics of market structure, which is ultimately responsible for different regimes of macro–economic growth. We find, first, that higher heterogeneity in consumption preferences amplifies and accelerates market dynamics, leading to a swift shift from a Malthusian to a Kaldorian growth pattern. Second, consumption smoothing mainly affects the timing of such a take–off. Inertia in consumption delays the occurrence of a Kaldorian engine for growth. Copyright Springer-Verlag Berlin Heidelberg 2016

Keywords: Consumption; Structural change; Income distribution; Technological change; Growth; O41; L16; C63; O14 (search for similar items in EconPapers)
Date: 2016
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Related works:
Working Paper: The effect of demand-driven structural transformations on growth and technological change (2016)
Working Paper: The Effect of Demand-Driven Structural Transformations on Growth and Technological Change (2015)
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DOI: 10.1007/s00191-015-0409-5

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