Structural Transformation in China and India: The Role of Macroeconomic Policies

Codrina Rada and Rudiger von Arnim ()

Working Paper Series, Department of Economics, University of Utah from University of Utah, Department of Economics

Abstract: This paper explores macroeconomic policies that can sustain structural change in China and India. A two--sector open--economy model with endogenous productivity growth, demand driven output and income distribution as an important determinant of economic activity is calibrated to a 2000 SAM for China and a 1999/2000 SAM for India. Short-- run analysis concerns temporary equilibria for output, productivity and employment growth rates in the formal sector. In the long--run, the model allows for multiple equilibria which can describe cases of (a) underdevelopment and structural heterogeneity or (b) sustained growth and development. Several simulation exercises are conducted. Specifically, we consider how changes in investment, wages, labor productivity trend and a depreciation of currency affect the macroeconomy and job creation in the formal sector.

Keywords: Structural change; endogenous productivity; dual economy; China; India JEL Classification: O11; O41; E26 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011
New Economics Papers: this item is included in nep-mac and nep-tra
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:uta:papers:2011_05

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