Beyond Balanced Growth. Economic Development; Industrialization
Piyabha P. Kongsamut
University of Rochester - Department of Economics
Sergio T. Rebelo
Northwestern University - Kellogg School of Management; Centre for Economic Policy Research (CEPR); University of Rochester - Department of Economics; National Bureau of Economic Research (NBER)
Hong Kong University of Science & Technology (HKUST) - Department of Economics
A1.15 WP 1693
One of the most striking regularities of the growth process is the massive reallocation of labor from agriculture into industry and services. Balanced growth models are commonly used in macroeconomics because they are consistent with the well-known Kaldor facts about economic growth. These models are, however, inconsistent with the structural change dynamics that are a central feature of economic development. This paper discusses models with generalized balanced growth paths. These paths retain some of the key features of balanced growth but are consistent with the observed labor reallocations dynamics.
JEL Classification: O14, O41working papers series
Date posted: March 16, 1998
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