Balanced growth with structural change

L. Rachel Ngai and Christopher Pissarides

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study a multi-sector model of growth with differences in TFP growth rates across sectors and derive sufficient conditions for the coexistence of structural change, characterized by sectoral labor reallocation, and constant aggregate growth path. The conditions are weak restrictions on the utility and production functions commonly applied by macroeconomists. We present evidence from US two-digit industries that is consistent with our predictions about structural change and successfully calibrate the historical shift from agriculture to manufacturing and services. We show quantitatively that reaonsable deviations from our conditions do not have a big impact on the properties of the model.

Keywords: multi-sector growth; structural change; unbalanced growth; balanced growth; sectoral employment (search for similar items in EconPapers)
JEL-codes: O14 O41 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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http://eprints.lse.ac.uk/4658/ Open access version. (application/pdf)

Related works:
Working Paper: Balanced Growth With Structural Change (2004)
Working Paper: Balanced Growth with Structural Change (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:4658

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