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The effect of demand-driven structural transformations on growth and technological change

Listed author(s):
  • André Lorentz

    ()

    (Université de Technologie de Belfort-Montbéliard)

  • Tommaso Ciarli

    ()

    (University of Sussex)

  • Maria Savona

    ()

    (University of Sussex)

  • Marco Valente

    ()

    (University of L’Aquila, and LEM, Sant’Anna School for Advanced Studies)

Abstract The paper analyses the effect of the dynamics of consumption preferences on the dynamics of macro–economic growth. We endogenously derive micro–dynamics of consumption behavior as a result of the increase in the number of income classes. The different degrees of inertia in the adjustment of consumption levels to income changes affect firm selection and the dynamics of market structure, which is ultimately responsible for different regimes of macro–economic growth. We find, first, that higher heterogeneity in consumption preferences amplifies and accelerates market dynamics, leading to a swift shift from a Malthusian to a Kaldorian growth pattern. Second, consumption smoothing mainly affects the timing of such a take–off. Inertia in consumption delays the occurrence of a Kaldorian engine for growth.

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File URL: http://link.springer.com/10.1007/s00191-015-0409-5
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Article provided by Springer in its journal Journal of Evolutionary Economics.

Volume (Year): 26 (2016)
Issue (Month): 1 (March)
Pages: 219-246

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Handle: RePEc:spr:joevec:v:26:y:2016:i:1:d:10.1007_s00191-015-0409-5
DOI: 10.1007/s00191-015-0409-5
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/journal/191/PS2

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