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A unified theory of structural change

  • Dolores Guilló, María
  • Papageorgiou, Chris
  • Perez-Sebastian, Fidel

This paper uses dynamic general equilibrium and computational methods, inspired by the multi-sector growth model structure in Stephen Turnovsky's work, to develop a theory that unifies two of the traditional explanations of structural change: sector-biased technical change and non-homothetic preferences. The theory is based on an overlapping-generations growth model with endogenous technical change and non-homothetic preferences. An expanding-variety setup with two different R&D technologies, agricultural, and non-agricultural, is employed. The analysis, based on numerical simulations, shows that the biased technical change hypothesis finds most support in the data. It also points to production-side specific factors, such as asymmetries in cross-sector knowledge spillovers, as explanatory factors of the bias in technical change.

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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 35 (2011)
Issue (Month): 9 (September)
Pages: 1393-1404

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Handle: RePEc:eee:dyncon:v:35:y:2011:i:9:p:1393-1404
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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