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The evolution of markets and the revolution of industry: A unified theory of growth

This paper puts forth a unified theory of growth that captures a number of relevant features of countries’ transitions from stagnant, predominantly rural economies to vibrant, industrialized economies that have been overlooked by the literature. In our theory, increasing variety of consumer goods and increasing firm size, which are the consequence of a gradual expansion in the market, sow the seeds for process innovation and an economy’s take-off. We demonstrate this mechanism in a dynamic general equilibrium model calibrated to England’s long-run development, and explore how various factors affected the timing of its take-off.

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Paper provided by Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales in its series Working Papers with number 2009-06.

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Date of creation: 25 May 2009
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Publication status: Published in Journal of Economic Growth
Handle: RePEc:imd:wpaper:wp2009-06
Note: This paper is included in the IMDEA Social Sciences Working Paper Series through the PROCIUDAD-CM and the Bank of Spain Excellence Programmes
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