Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences

Timo Boppart

No 2, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: Growth of per-capita income is associated with (i) significant shifts in the sectoral economic structure, (ii) systematic changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic expenditure structure difference between rich and poor households. Ngai and Pissarides (2006) and Acemoglu and Guerrieri (2008) are consistent with observation (i)-(iii) but abstract form non-homotheticities of preferences. However, they cannot replicate the structural change between the U.S. goods and service sector quantitatively. This paper presents a growth model, which reconciles both forces of structural change - relative price and income effects - with balanced growth on the aggregate. The theory is simple and parsimonious and contains an analytical solution. The model can replicate shape and magnitude of the nonbalanced sectoral facts as well as the balanced nature of growth on the aggregate. In a structural estimation, the model’s functional form is exploited to obtain estimates for the relative importance of income and price effects as determinants of the structural change.

Keywords: Structural change; relative price effect; non-Gorman preferences; Kaldor facts. (search for similar items in EconPapers)
JEL-codes: D90 O14 O30 O41 (search for similar items in EconPapers)
Date: 2011-01
New Economics Papers: this item is included in nep-fdg
References: View complete reference list from CitEc
Citations: View citations in EconPapers (44)

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Related works:
Journal Article: Structural Change and the Kaldor Facts in a Growth Model With Relative Price Effects and Non‐Gorman Preferences (2014)
Working Paper: Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences (2013)
Working Paper: Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:002

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