Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation
AbstractThe paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal optimizing model are relatively high capital intensity in the production of goods and limited cross-border capital mobility, allowing the interest rate to vary. With plausible parameterization, the model also predicts a decline in the employment share of the goods sector over time. (Copyright: Elsevier)
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Bibliographic InfoArticle provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 8 (2005)
Issue (Month): 3 (July)
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Other versions of this item:
- Vladimir Klyuev, 2004. "Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation," IMF Working Papers 04/207, International Monetary Fund.
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
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