English, Article, Journal or magazine article edition: Structural Change and the Kaldor Facts of Economic Growth Josef Zweimüller; Reto Foellmi; Josef Zweilmueller

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Structural Change and the Kaldor Facts of Economic Growth
Author
  • Josef Zweimüller
  • Reto Foellmi
  • Josef Zweilmueller
Physical Description
  • preprint
Notes
  • 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.
  • Kaldor facts, balanced growth, structural change, innovation, hierarchic preferences, demand externalities, multiple equilibria.
  • RePEc:zur:iewwpx:111
  • The model presented in this paper reconciles two of the most important features of the long-run growth process: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. Structural change occurs because Engel-curves are non-linear. Each new good goes through Engel's consumption cycle, i.e. starts out as a luxury with a high income elasticity and ends up as a necessity with a low income elasticity. The coexistence of stagnating and expanding industries imply a changing sectoral composition and a continuous reallocation of labor across sectors. Nonetheless macroeconomic aggregates grow at a constant rate, and the real interest rate and the labor share are constant. Our model also addresses the two-way causality between economic growth and structural change. Complementarities between aggregate and sectoral growth may give rise to multiple equilibria providing a possible explanation for development failures
  • Kaldor facts, Engel-curve, structural change, structural transformation, hierarchic preferences
  • RePEc:red:sed006:342
Language
  • English
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