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

Author

Listed:
  • Andre Lorentz

    (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)

  • Tommaso Ciarli

    (SPRU - Science and Technology Policy Research - University of Sussex)

  • Maria Savona

    (SPRU - Science and Technology Policy Research - University of Sussex)

  • Marco Valente

    (UNIVAQ - Università degli Studi dell'Aquila = University of L'Aquila = Université de L'Aquila)

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 behaviour 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, firstly, that higher heterogeneity in consumption preferences amplifies and accelerates mar- ket dynamics, leading to a swift shift from a Malthusian to a Kaldorian growth pattern. Secondly, consumption smoothing mainly affects the timing of such a take–off. Inertia in consumption delays the occurrence of a Kaldorian engine for growth.

Suggested Citation

  • Andre Lorentz & Tommaso Ciarli & Maria Savona & Marco Valente, 2016. "The effect of demand-driven structural transformations on growth and technological change," Post-Print hal-01723060, HAL.
    • Handle: RePEc:hal:journl:hal-01723060
    DOI: 10.1007/s00191-015-0409-5
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    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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