Progressive services, asymptotically stagnant services, and manufacturing: Growth and structural change
AbstractWe present a model of structural change which, distinctively, sub-divides services (S) into ‘Progressive Services’ (PS) and ‘Asymptotically Stagnant Services’ (AS), to better reflect the advent of the New Economy. A manufacturing (M) sector is also included, and non-homothetic preferences assumed. An expanding-product-variety endogenous-growth framework is adopted, and partially overlapping input sets across the three (sub-)sectors assumed. The model endogenously generates different stages of growth: services which in due course become classified as progressive first overtake AS, and then M, in innovation-driven productivity growth, consistent with post-World-War-II US experience. The socially optimal growth pattern differs qualitatively from the private, and optimal, time-varying R&D subsidies are identified.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economic Dynamics and Control.
Volume (Year): 36 (2012)
Issue (Month): 9 ()
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Web page: http://www.elsevier.com/locate/jedc
Progressive services; Information technology; Structural change; Endogenous growth; Non-homothetic preferences;
Find related papers by JEL classification:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
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