Advanced Search
MyIDEAS: Login to save this paper or follow this series

Transition Dynamics in the Neoclassical Growth Model: The Case of South Korea

Contents:

Author Info

  • Yongsung Chang

    ()
    (University of Rochester)

  • Andreas Hornstein

    ()
    (Federal Reserve Bank of Richmond)

Abstract

Many cases of successful economic development, such as South Korea, exhibit long periods of sustained capital accumulation rates. This empirical feature is at odds with the standard neoclassical growth model which predicts initially high and then declining capital accumulation rates. We show that minor modifications of the neoclassical model go a long way towards accounting for the transition dynamics of the South Korean economy. Our modifications recognize that (1) agriculture essentially does not use reproducible capital, and that during the transition period (2) the relative price of capital declines substantially, and (3) the nonfarm employment share increases substantially.

Download Info

If 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.
File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_565.pdf
File Function: full text
Download Restriction: None

Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 565.

as in new window
Length: 29 pages
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:roc:rocher:565

Contact details of provider:
Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

Related research

Keywords: neoclassical growth model; transition dynamics; industrialization; price of capital; South Korea;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Simon Gilchrist & John C. Williams, 2004. "Transition dynamics in vintage capital models: explaining the postwar catch-up of Germany and Japan," Working Paper Series, Federal Reserve Bank of San Francisco 2004-14, Federal Reserve Bank of San Francisco.
  2. Francisco J. Buera & Yongseok Shin, 2010. "Financial Frictions and the Persistence of History: A Quantitative Exploration," NBER Working Papers 16400, National Bureau of Economic Research, Inc.
  3. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report, Federal Reserve Bank of Minneapolis 239, Federal Reserve Bank of Minneapolis.
  4. Rappaport, Jordan, 2006. "A bottleneck capital model of development," Journal of Monetary Economics, Elsevier, Elsevier, vol. 53(8), pages 2113-2129, November.
  5. Martin, Philippe & Rogers, Carol Ann, 1995. "Stabilization Policy, Learning by Doing, and Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1130, C.E.P.R. Discussion Papers.
  6. Papageorgiou, Chris & Perez-Sebastian, Fidel, 2006. "Dynamics in a non-scale R&D growth model with human capital: Explaining the Japanese and South Korean development experiences," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 30(6), pages 901-930, June.
  7. Francesco Caselli & James Feyrer, 2006. "The Marginal Product of Capital," CEP Discussion Papers, Centre for Economic Performance, LSE dp0735, Centre for Economic Performance, LSE.
  8. Douglas Gollin & Stephen L. Parente & Richard Rogerson, 2004. "The Food Problem and the Evolution of International Income Levels," Working Papers, Economic Growth Center, Yale University 899, Economic Growth Center, Yale University.
  9. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 420, University of Rochester - Center for Economic Research (RCER).
  10. Xavier Sala-i-Martin, 1996. "Transfers, Social Safety Nets, and Economic Growth," IMF Working Papers, International Monetary Fund 96/40, International Monetary Fund.
  11. Chang-Tai Hsieh & Peter J. Klenow, 2003. "Relative Prices and Relative Prosperity," NBER Working Papers 9701, National Bureau of Economic Research, Inc.
  12. Restuccia, Diego & Urrutia, Carlos, 2001. "Relative prices and investment rates," Journal of Monetary Economics, Elsevier, Elsevier, vol. 47(1), pages 93-121, February.
  13. King, R.G. & Rebelo, S.T., 1989. "Transitional Dynamics And Economic Growth In The Neoclassical Model," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 206, University of Rochester - Center for Economic Research (RCER).
  14. Ben S. Bernanke & Refet S. Gurkaynak, 2001. "Is Growth Exogenous? Taking Mankiw, Romer and Weil Seriously," NBER Working Papers 8365, National Bureau of Economic Research, Inc.
  15. Abigail Barr, 1995. "The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana," Economics Series Working Papers, University of Oxford, Department of Economics WPS/1995-11, University of Oxford, Department of Economics.
  16. Liwa Rachel Ngai, 2000. "Barriers and the Transition to Modern Growth," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1578, Econometric Society.
  17. van Ark, Bart, 1998. "Productivity," Journal of the Japanese and International Economies, Elsevier, vol. 12(2), pages 171-174, June.
  18. Selo Imrohoroglu & Kaiji Chen & Ayse Imrohoroglu, 2005. "Japanese Saving Rate," 2005 Meeting Papers, Society for Economic Dynamics 747, Society for Economic Dynamics.
  19. Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
  20. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, De Gruyter, vol. 4(1), pages 1-36, April.
  21. Young, Alwyn, 1994. "Lessons from the East Asian NICS: A contrarian view," European Economic Review, Elsevier, Elsevier, vol. 38(3-4), pages 964-973, April.
  22. Kent Smetters, 2003. "The (Interesting) Dynamic Properties of the Neoclassical Growth Model with CES Production," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 697-707, July.
  23. Margarida Duarte & Diego Restuccia, 2007. "The Role of the Structural Transformation in Aggregate Productivity," Working Papers, University of Toronto, Department of Economics tecipa-300, University of Toronto, Department of Economics.
  24. Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 641-80, August.
  25. Ben S. Bernanke & Kenneth Rogoff, 2001. "Editorial in "NBER Macroeconomics Annual 2000, Volume 15"," NBER Chapters, National Bureau of Economic Research, Inc, in: NBER Macroeconomics Annual 2000, Volume 15, pages 1-4 National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Berthold Herrendorf & Richard Rogerson & Ákos Valentinyi, 2013. "Growth and Structural Transformation," NBER Working Papers 18996, National Bureau of Economic Research, Inc.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:roc:rocher:565. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gabriel Mihalache).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.