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A theory of structural change that can fit the data

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  • Alder, Simon
  • Boppart, Timo
  • Müller, Andreas

Abstract

We study structural change in historical consumption expenditure of the United States, the United Kingdom, Canada and Australia over more than a century. To identify preference parameters from aggregate data, we characterize the most general class of preferences in a time-additive setting that admits aggregation of the intertemporal saving decision. We parametrize and estimate such intertemporally aggregable (IA) preferences and discuss their properties in a dynamic general equilibrium framework with sustained growth. Our preferences class is considerably more flexible than the Gorman form or PIGL/PIGLOG, giving rise to a good fit of the non-monotonic pattern of structural change.

Suggested Citation

  • Alder, Simon & Boppart, Timo & Müller, Andreas, 2019. "A theory of structural change that can fit the data," CEPR Discussion Papers 13469, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:13469
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    Cited by:

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    2. David Baqaee & Ariel Burstein, 2021. "Welfare and Output with Income Effects and Taste Shocks," NBER Working Papers 28754, National Bureau of Economic Research, Inc.
    3. Margarida Duarte & Diego Restuccia, 2020. "Relative Prices and Sectoral Productivity," Journal of the European Economic Association, European Economic Association, vol. 18(3), pages 1400-1443.
    4. Sen, Ali, 2020. "Structural change within the services sector, Baumol's cost disease, and cross-country productivity differences," MPRA Paper 99614, University Library of Munich, Germany.
    5. Hao, Tongtong & Sun, Ruiqi & Tombe, Trevor & Zhu, Xiaodong, 2020. "The effect of migration policy on growth, structural change, and regional inequality in China," Journal of Monetary Economics, Elsevier, vol. 113(C), pages 112-134.
    6. Fang, Lei & Herrendorf, Berthold, 2021. "High-skilled services and development in China," Journal of Development Economics, Elsevier, vol. 151(C).
    7. Fabio Monteforte & Mathan Satchi & Jonathan R. W. Temple, 2021. "Development priorities: the relative benefits of agricultural growth," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1122-1152.
    8. Fabian Eckert & Michael Peters, 2018. "Spatial Structural Change," 2018 Meeting Papers 98, Society for Economic Dynamics.

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    More about this item

    Keywords

    aggregation; Multi-sector growth model; non-homothetic preferences; Non-monotonic Engel curves; Relative price effects; structural change;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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