EconPapers    
Economics at your fingertips  
 

Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective

Kjetil Storesletten, Bo Zhao () and Fabrizio Zilibotti
Additional contact information
Fabrizio Zilibotti: Cowles Foundation, Yale University, https://economics.yale.edu/people/faculty/fabrizio-zilibotti

No 2191, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We document that the nature of business cycles evolves over the process of development and structural change. In countries with large declining agricultural sectors, aggregate employment is uncorrelated with GDP. During booms, employment in agriculture declines while labor productivity increases in agriculture more than in other sectors. We construct a unified theory of business cycles and structural change consistent with the stylized facts. The focal point of the theory is the simultaneous decline and modernization of agriculture. As capital accumulates, agriculture becomes increasingly capital intensive as modern agriculture crowds out traditional agriculture. Structural change accelerates in booms and slows down in recessions. We estimate the model and show that it accounts well for both the structural transformation and the business cycle fluctuations of China.

Keywords: Agriculture; Business Cycle; Capital Accumulation; China; Employment; Lewis; Modernization; Structural Change (search for similar items in EconPapers)
JEL-codes: E32 O11 O13 O14 O41 O47 O53 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2019-08
New Economics Papers: this item is included in nep-cna, nep-dge, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/files/pub/d21/d2191.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective (2020) Downloads
Working Paper: Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2191

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().

 
Page updated 2024-04-11
Handle: RePEc:cwl:cwldpp:2191