CONFORMISM AND STRUCTURAL CHANGE

Takeo Hori, Masako Ikefuji and Kazuo Mino

International Economic Review, 2015, vol. 56, issue 3, 939-961

Abstract: Using a simple, multisector model of endogenous growth, we show that commodity‐specific consumption externalities can be a source of structural change. When the degrees of consumption externalities are different between goods, each sector grows at a different rate. However, the aggregate economy exhibits balanced growth in that capital stock and expenditure grow at the same constant rate. A three‐sector version of our model may reconcile Kaldor's stylized facts with empirically plausible profiles of industrial structure transformation.

Date: 2015
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https://doi.org/10.1111/iere.12127

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Working Paper: Conformism and Structural Change (2012)
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