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The Farmer, the Blue-collar, and the Monk: Understanding economic development through saturations of demands and non-homothetic productivity gains

Elie Gray, André Grimaud and David Le Bris

No 18-906, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: To explain the process of development historically documented, we consider a model with three economic sectors (agriculture, manufacturing and services) characterized by different productivity gains and by saturation levels in the demands of agricultural and manufactured goods. Our parsimonious model captures within a single framework the process of development which is characterized by the structural changes in the workforce across sectors, variable growth rates (an initial “Malthusian regime” exhibiting slow growth, a fast growth regime after a takeoff, and a gradual slow down leading to a possible new stagnation) and the relative evolutions of prices across sectors. Reasonable calibration generates results quantitatively close to the observed empirical facts.

Keywords: Growth model; Structural change; Unified growth; Economic development; Saturation of demands (search for similar items in EconPapers)
JEL-codes: N1 O1 O4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-gro and nep-lma
Date: 2018-03
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