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Structural Change and the Kaldor Facts of Economic Growth

  • Foellmi, Reto

    ()

    (University of Zurich)

  • Zweimüller, Josef

    ()

    (University of Zurich)

We present a model in which two of the most important features of the long-run growth process are reconciled: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. We assume that households expand their consumption along a hierarchy of needs and firms introduce continuously new products. In equilibrium industries with an expanding and those with a declining employment share co-exist, and each such industry goes (or has already gone) through a cycle of take-off, maturity, and stagnation. Nonetheless macroeconomic aggregates grow pari passu at a constant rate.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 472.

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Length: 47 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:iza:izadps:dp472
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  17. Baumol, William J. & Batey Blackman, Sue Anne & Wolff, Edward N., 1984. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," Working Papers 84-02, C.V. Starr Center for Applied Economics, New York University.
  18. Falkinger, Josef, 1994. "An Engelian model of growth and innovation with hierarchic consumer demand and unequal incomes," Ricerche Economiche, Elsevier, vol. 48(2), pages 123-139, June.
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