Industrial structure and productivities in a two-sector growth model

Guo, Lu and Li, Fangfang (2015): Industrial structure and productivities in a two-sector growth model.

Abstract

We set up a model of heterogeneous-producers based on the semi-rival technology to study how industrial structure transforms and different sectional productivities. In a fully market-oriented economy, the industrial structure is endogenous and sectional productivities are the same. Employing fiscal subsidies to different industries lead to changes in both industrial structure and productivities, while the growth rate and interest rate keep fixed. For plausible values of parameters, the benchmark model generates results consistent with the United States’ data, and the extension model partly explains China’s industrial transformation and changes of industrial productivities.

• Item Type: MPRA Paper
• Language: English
• Keywords: Industrial structure; Productivities; Two-sector growth model
• Subjects: E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H20 - General

References

(1)Acemoglu, Daron; Guerrieri Veronica (2008): Capital deepening and non-balanced economic growth. In Journal of Political Economy 116, pp.467–498.

(2)Aghion, Philippe; Howitt Peter (1992): A Model of Growth Through Creative Destruction. In Econometrica, 60(2), pp. 323-351.

(3)Arrow, Kenneth (1962): The Economic Implications of Learning by Doing. In Reviews of Economic Studies 29, pp.155-173.

(4)Barro, Robert; Mankiw, Gregory; Sala-I-Martin, Xavier (1995): Capital Mobility in Neoclassical Models of Growth. In The American Economic Review 85(1), pp. 103-115.

(5)Buera, Francisco; Kaboski, Joseph (2008a): Can Traditional Theories of Structural Change Fit the Data? In Northwestern University working paper.

(6)Buera Francisco and Kaboski Joseph，(2008b), “Scale and the Origins of Structural Change”, Northwestern University working paper.

(7)Jones, Charles (1995a): Time Series Tests of Endogenous Growth Models. In The Quarterly Journal of Economics 110(2), pp. 495-525.

(8)Jones, Charles (1995b): R&D-Based Models of Economic Growth. In Journal of Political Economy 103(4), pp. 759-784.

(9)Echevarria Cristina (1997): Changes in Sectional Composition Associated with Economic Growth. In International Economic Review 38(2), pp.431-452.

(10)Foellmi, Reto; Zweimuller, Josef (2008): Structural Change, Engel's Consumption Cycles and Kaldor's Facts of Economic Growth. In Journal of Monetary Economics 55(7), pp.1317-1328.

(11)Jones, Charles and Romer, Paul (2010): The New Kaldor Facts: Ideas, Institutions, Population, and Human Capital. In American Economic Journal: Macroeconomics 2(1), pp.224-245.

(12)Kaldor, Nicholas (1961): Capital Accumulation and Economic Growth. In F.A. Lutz and D.C. Hague,eds., The Theory of Capital, St.Martins Press, pp. 177–222.

(13)Herrendorf, Berthold; Rogerson, Richard; Valentinyi, Ákos (2013). In Growth and Structural Transformation. NBER Working Paper No. 18996.

(14)Kongsamut, Piyabha; Rebelo Sergi; Xie, Danyang (2001): Beyond Balanced Growth. In Review of Economic Studies 68, pp.869–882.

(15)Kosempel, Stephen (2004): A theory of development and long run growth. In Journal of Development Economics 75, pp.201– 220.

(16)Ngai, Rachel; Pissarides, Christopher (2007): Structural change in a multi-section model of growth. In The American Economic Review 97, pp.429–443.

(17)Ngai, Rachel and Pissarides, Christopher (2008): Trends in hours and economic growth. In Review Economic Dynamics 11, pp. 239–256.

(18)Laitner, John (2000): Structural Change and Economic Growth. In Review of Economic Studies 67(3), pp.545－561.

(19)Lucas, Robert (1990): Supply-Side Economics: An Analytical Review. In Oxford Economic Papers 42, pp.293-316.

(20)Lucas, Robert (2009): Trade and the Diffusion of the Industrial Revolution. In American Economic Journal: Macroeconomics 1, pp. 1-25.

(21)Lucas, Robert (1988): On the Mechanics of Economic Development. In Journal of Monetary Economics 22 (1), pp.3–42.

(22)Mankiw, Gregory; Romer, David; Weil David (1992): A Contribution to the Empirics of Economic Growth. In The Quarterly Journal of Economics 107(2), pp. 407-437.

(23)Park, Walter (1998): A Theoretical Model of Government Research and Growth. In Journal of Economic Behavior and Organization 34(1), pp. 51-67.

(24)Rogerson, Richard (2008): Structural Transformation and the Deterioration of European Labor Market Outcomes. In Journal of Political Economy 116(2), pp. 235-259.

(25)Romer, Paul (1986): Increasing Returns and Long-Run Growth. In Journal of Political Economy 94, pp.71–102.

(26)Romer, Paul (1990): Endogenous Technological Change. In Journal of Political Economy 98 (5), pp.S71-S102

(27)Segerstrom, Paul (1998): Endogenous Growth without Scale Effects. In The American Economic Review 88(5), pp. 1290-1310.

(28)Turnovsky, Stephen (2004): The Transitional Dynamics of Fiscal Policy: Long-Run Capital Accumulation and Growth. In Journal of Money, Credit and Banking 36(5), pp. 883-910

(29)Uzawa, Hirofumi (1964): Optimal Growth in a Two-Section Model of Capital Accumulation. In Review of Economic Studies 31, pp. 1-24.