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The Evolution of Markets and the Revolution of Industry: a unified theory of growth

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  • Klaus Desmet

    (Universidad Carlos III)

  • Stephen L. Parente

    (University of Illinois)

Abstract

This paper puts forth a unified theory of growth that captures a number of relevant features of countries' transitions from stagnant, predominantly rural economies to vibrant, industrialized economies that have been overlooked by the literature. In our theory, increasing variety of consumer goods and increasing firm size, which are the consequence of a gradual expansion in the market, sow the seeds for process innovation and an economy's take-off. We demonstrate this mechanism in a dynamic general equilibrium model calibrated to England's long-run development, and explore how various factors affected the timing of its take-off.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 990.

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Date of creation: 2010
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Handle: RePEc:red:sed010:990

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Cited by:
  1. Kourtellos, Andros & Stylianou, Ioanna & Tan, Chih Ming, 2013. "Failure to launch? The role of land inequality in transition delays," European Economic Review, Elsevier, vol. 62(C), pages 98-113.
  2. Alex Trew, 2009. "Institutions and the Scale Effect," CDMA Working Paper Series 200906, Centre for Dynamic Macroeconomic Analysis, revised 03 Apr 2011.
  3. Alex Trew, 2014. "Spatial Takeoff in the First Industrial Revolution," Discussion Paper Series, Department of Economics 201401, Department of Economics, University of St. Andrews, revised 01 Jan 2014.
  4. Attar, M. Aykut, 2013. "Growth and Demography in Turkey: Economic History vs. Pro-Natalist Rhetoric," MPRA Paper 47275, University Library of Munich, Germany.
  5. Klaus Desmet & Stephen Parente, 2014. "Resistance to Technology Adoption: The Rise and Decline of Guilds," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(3), pages 437-458, July.

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