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Balanced Growth With Structural Change

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  • L. Rachel Ngai
  • Christopher A. Pissarides

Abstract

We study a multi-sector model of growth with differences in TFP growth rates across sectorsand derive sufficient conditions for the coexistence of a balanced aggregate growth path, withall aggregates growing at the same rate, and structural change, characterized by sectoral laborreallocation. The conditions needed are weak restrictions on the utility and productionfunctions: goods should be poor substitutes and the intertemporal elasticity of substitutionshould be one. We present evidence from US and UK sectors, that is consistent with ourconclusions and successfully calibrate the shift from agriculture to manufacturing andservices in the United States.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0627.

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Date of creation: Apr 2004
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Handle: RePEc:cep:cepdps:dp0627

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: structural change; balanced growth; total factor productivity;

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  1. Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1693, C.E.P.R. Discussion Papers.
  2. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, American Economic Association, vol. 75(4), pages 806-17, September.
  3. Baumol, William J, 1972. "Macroeconomics of Unbalanced Growth: Reply," American Economic Review, American Economic Association, American Economic Association, vol. 62(1), pages 150, March.
  4. Temple, Jonathan, 2001. "Structural Change and Europe's Golden Age," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2861, C.E.P.R. Discussion Papers.
  5. Laitner, John, 2000. "Structural Change and Economic Growth," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 67(3), pages 545-61, July.
  6. Douglas Gollin & Steven Parente & Richard Rogerson, 2003. "Structural Transformation and Cross-Country Income Differences," Levine's Working Paper Archive 506439000000000259, David K. Levine.
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Cited by:
  1. Francesco Caselli & Silvana Tenreyro, 2006. "Is Poland the Next Spain?," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 459-533 National Bureau of Economic Research, Inc.
  2. Jaime Alonso-Carrera & Xavier Raurich, 2007. "Growth, Sectoral Composition, And The Wealth Of Nations," CAMA Working Papers 2007-15, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Dobrescu, Emilian, 2011. "Sectoral Structure and Economic Growth," Working Papers of Macroeconomic Modelling Seminar, Institute for Economic Forecasting 112401, Institute for Economic Forecasting.
  4. Roberto Samaniego, 2013. "Stages of Diversification and Industry Productivity Differences," 2013 Meeting Papers, Society for Economic Dynamics 774, Society for Economic Dynamics.

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