Structural Change and Business Cycles: An Evolutionary Approach

André Lorentz and Maria Savona (m.savona@sussex.ac.uk)

Papers on Economics and Evolution from Philipps University Marburg, Department of Geography

Abstract: The aim of this paper is to account for both the short-run fluctuations and the very-long run transformations induced by technological change in analysing long-run growth patterns. The paper investigates the possible imprint left by short-run fluctuations on the long run dynamics by affecting the mechanisms underlying structural change. To fulfil this aim, we revert to a growth model with evolutionary microfounded structural change. The model endogenies both technical change and changes in patterns of final and intermediate demand as affecting macro-economic growth, through the structural change of the economy. This work is in line with the attempts to embracing in a unifying framework both neo-Schumpeterian and Keynesian line of thoughts in explaining economic growth. This model directly extends the one presented in Lorentz and Savona (2008). The paper reverts to numerical simulations to investigate both the imprint of various business cycles scenarios on the structural change patterns and the effect of various structural change scenarios on the amplitude of business cycles. We carry out the numerical simulation on the basis of the actual I-O coefficients for Germany. These numerical simulations show us that one the one hand, the factor at the source of business cycles drastically affect the patterns of structural change. On the other hand, the mechanisms at the core of structural change, generates business cycles as a by-product.

Keywords: Structural Change; Technical Change; Economic Growth; Short-run Fluctuations Length 39 pages (search for similar items in EconPapers)
JEL-codes: E11 E32 O33 O41 (search for similar items in EconPapers)
Date: 2010-12
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Citations: View citations in EconPapers (4)

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