Sectoral Composition and Macroeconomic Dynamics
AbstractWe analyze the transitional dynamics of a model with heterogeneous consumption goods. In this model, convergence is driven by two different forces: the typical diminishing returns to capital and the sectoral change inducing the variation in relative prices. We show that this second force a�ects the growth rate if the two consumption goods are not Edgeworth independent and if these two goods are produced with technologies exhibiting different capital intensities. Because the aforementioned dynamic sectoral change arises only under heterogeneous consumption goods, the transitional dynamics of this model exhibits striking differences with the growth model with a single consumption good. We also show that these differences in the transitional dynamics can give raise to large discrepancies in the welfare cost of shocks between the economy with a unique consumption good and the economy with multiple consumption goods.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 545.
Date of creation: Apr 2011
Date of revision:
multi-sector growth models; transitional dynamics; consumption growth;
Other versions of this item:
- Jaime Alonso-Carrera & Jordi Caballé & Xavier Raurich, 2011. "Sectoral composition and macroeconomic dynamics," UFAE and IAE Working Papers, Unitat de Fonaments de l'AnÃ lisi EconÃ²mica (UAB) and Institut d'AnÃ lisi EconÃ²mica (CSIC) 869.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Perli, Roberto & Sakellaris, Plutarchos, 1998. "Human capital formation and business cycle persistence," Journal of Monetary Economics, Elsevier, Elsevier, vol. 42(1), pages 67-92, June.
- Daron Acemoglu & Veronica Guerrieri, 2008.
"Capital Deepening and Nonbalanced Economic Growth,"
Journal of Political Economy, University of Chicago Press,
University of Chicago Press, vol. 116(3), pages 467-498, 06.
- Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," 2006 Meeting Papers, Society for Economic Dynamics 207, Society for Economic Dynamics.
- Daron Acemoglu & Veronica Guerrieri, 2006. "Capital Deepening and Non-Balanced Economic Growth," NBER Working Papers 12475, National Bureau of Economic Research, Inc.
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen J. Turnovsky, 2004.
"Habit Formation, Catching Up with the Joneses, and Economic Growth,"
Journal of Economic Growth, Springer,
Springer, vol. 9(1), pages 47-80, 03.
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen Turnovsky, 2004. "Habit Formation, Catching Up with the Joneses, and Economic Growth," Working Papers, University of Washington, Department of Economics UWEC-2004-09-P, University of Washington, Department of Economics, revised Jan 2004.
- Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, Elsevier, vol. 62(2), pages 343-361, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar).
If references are entirely missing, you can add them using this form.