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Accounting for Structural Change Over Time: A Case Study of Three Middle-Income Countries

Author

Listed:
  • Michael Sposi

    (Federal Reserve Bank of Dallas)

  • Jing Zhang

    (Federal Reserve Bank of Chicago)

  • Kei-Mu Yi

    (University of Houston)

Abstract

We review the main mechanisms of structural change: non-homothetic preferences, asymmetric productivity growth couple with non-unitary elasticities of substitution and comparative advantage and international trade, as well as several additional mechanisms. We then present some key established and recent facts of structural change. To understand these facts better, we develop a dynamic, multi-sector, multi-country model of structural change that embodies the mechanisms we review. We calibrate the model, and back out the "wedges" that account for the evolution of the model's endogenous variables. Then, focusing on the evolution of the industry employment share in Hungary, Portugal, and South Korea post-1990, we conduct several structural accounting decompositions. Our decompositions suggests that several of the mechanisms play important roles in the evolution of the industry employment share and of openness in these countries.

Suggested Citation

  • Michael Sposi & Jing Zhang & Kei-Mu Yi, 2018. "Accounting for Structural Change Over Time: A Case Study of Three Middle-Income Countries," 2018 Meeting Papers 1141, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1141
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    References listed on IDEAS

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    1. Diego Comin & Danial Lashkari & Martí Mestieri, 2021. "Structural Change With Long‐Run Income and Price Effects," Econometrica, Econometric Society, vol. 89(1), pages 311-374, January.
    2. Logan T Lewis & Ryan Monarch & Michael Sposi & Jing Zhang, 2022. "Structural Change and Global Trade," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 476-512.
    3. Sposi, Michael, 2019. "Evolving comparative advantage, sectoral linkages, and structural change," Journal of Monetary Economics, Elsevier, vol. 103(C), pages 75-87.
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    Cited by:

    1. Mariarosaria Comunale & Giulia Felice, 2022. "Trade and structural change: An empirical investigation," International Economics, CEPII research center, issue 171, pages 80-109.
    2. Michael Sposi & Jing Zhang & Kei-Mu Yi, 2019. "Structural Change and Deindustrialization," 2019 Meeting Papers 1328, Society for Economic Dynamics.
    3. Perez Sebastian,Fidel & Steinbuks,Jevgenijs & Feres,Jose Gustavo & Trotter,Ian Michael, 2020. "Electricity Access and Structural Transformation : Evidence from Brazil's Electrification," Policy Research Working Paper Series 9182, The World Bank.

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