On Using Applied General Equilibrium Models for Analysing Structural Change

Peter Dixon

Chapter 11 in Structural Change, Economic Interdependence and World Development, 1987, pp 149-158 from Palgrave Macmillan

Abstract: Abstract Structural change refers to changes in the industrial composition of the GDP, the regional allocation of economic activity and the occupational composition of the demand for labour. Structural changes are caused by, among other things, changes in tariffs, capital accumulation, technical change, changes in consumer tastes and changes in world commodity prices. Structural changes are of little concern during periods of overall growth when all sectors of the economy are achieving positive growth rates and intersectoral shifts of existing resources are not required. However, in a period of low overall growth, structural change may require committed resources to be transferred to alternative uses. These transfers may involve becoming idle for lengthy periods, imposing costs on the possessors of particular labour skills and on the owners of specific types of capital. In these circumstances, we often find strong resistance to structural change from trade unions and capitalists in threatened industries. It is in the interests of these groups to overstate the effects of structural change on their members. The result is often panicky moves towards protectionism and other undesirable policies.

Keywords: General Equilibrium; Endogenous Variable; Micro Model; Impact Project; Macro Model (search for similar items in EconPapers)
Date: 1987
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DOI: 10.1007/978-1-349-18840-6_11

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