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Household production and development

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Abstract

The authors introduce home production into the neoclassical growth model and examine its consequences for development economics. They focus on how well differences in policies that distort capital accumulation explain international income differences. In models with home production, such policies not only reduce capital accumulation, they also change the mix of market and nonmarket activity; therefore, for a given policy differential, these models generate larger differences in output than standard models. The authors show that policy differences? welfare implications (hence the welfare implications of differences in market income) change when home production is explicitly incorporated into the model.

Suggested Citation

  • Stephen L. Parente & Richard Rogerson & Randall Wright, 1999. "Household production and development," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 21-35.
    • Handle: RePEc:fip:fedcer:y:1999:i:qiii:p:21-35
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    Cited by:

    1. Stephen Parente, 2000. "EconomicDynamics Interviews Stephen Parente on the barriers to development," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 2(1), November.
    2. Chyi, Yih-Luan & Hwang, Chun-Sin, 2011. "Development of domestic markets and poverty reduction for poor developing economies," Economic Modelling, Elsevier, vol. 28(1-2), pages 374-381, January.
    3. Chyi, Yih-Luan & Hwang, Chun-Sin, 2011. "Development of domestic markets and poverty reduction for poor developing economies," Economic Modelling, Elsevier, vol. 28(1), pages 374-381.
    4. Dario Cziraky & Max Gillman, 2004. "Inflation and Endogenous Growth in Underground Economies," wiiw Balkan Observatory Working Papers 50, The Vienna Institute for International Economic Studies, wiiw.

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