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A unified theory of structural change

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Author Info

  • Chris Papageorgiou

    () (Louisiana State University)

  • Fidel Pérez Sebastián

    () (Universidad de Alicante)

  • María Dolores Guilló Fuentes

    () (Universidad de Alicante)

Abstract

This paper uses dynamic general equilibrium and computational methods, inspired by the multi-sector growth model structure in Stephen Turnovsky’s previous and more recent work, to develop a theory that unifies two of the traditional explanations of structural change: sector-biased technical change and non-homothetic preferences. More specifically, we build a multisector overlapping generations growth model with endogenous technical-change and non-homothetic preferences based on an expanding-variety setup with two different R&D technologies; one for agriculture, and another for non-agriculture. Results give additional support to the biased technical-change hypothesis as an important determinant of the structural transformation. The paper also explores where this bias might come from. Our findings suggest that production-side specific factors, such as asymmetries in cross-sector knowledge spillovers could be behind it, and therefore be important to fully explain the process of structural change.

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Bibliographic Info

Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2010-34.

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Length: 30 pages
Date of creation: Jan 2010
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2010-34

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Related research

Keywords: multi-sector growth model; structural change; agriculture and non-agriculture; R&D; directed innovation; hon-homothetic preferences.;

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References

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  1. Stephen Turnovsky, 2000. "The Transitional Dynamics of Fiscal Policy: Long-run Capital Accumulation and Growth," Working Papers 0018, University of Washington, Department of Economics.
  2. Ngai, Liwa Rachel & Pissarides, Christopher, 2004. "Structural Change in a Multi-Sector Model of Growth," CEPR Discussion Papers 4763, C.E.P.R. Discussion Papers.
  3. Maliar, Lilia & Maliar, Serguei & Valli, Fernando, 2010. "Solving the incomplete markets model with aggregate uncertainty using the Krusell-Smith algorithm," Journal of Economic Dynamics and Control, Elsevier, vol. 34(1), pages 42-49, January.
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Cited by:
  1. Takeo Hori & Masako Ikefuji & Kazuo Mino, 2011. "Conformism and Structural Change," ISER Discussion Paper 0827, Institute of Social and Economic Research, Osaka University.

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