Beyond Balanced Growth
21 Pages Posted: 31 Jan 2006
Date Written: June 2001
Balanced growth models are commonly used in macroeconomics because they are consistent with the well-known Kaldor facts regarding economic growth. These models, however, are inconsistent with one of the most striking regularities of the growth process - the massive reallocation of labor from agriculture into manufacturing and services. This paper presents a simple model consistent with both the Kaldor facts and the dynamics of sectoral labor reallocation. The model shows that balanced growth can be consistent with structural change.
Keywords: growth, structural change, Kaldor facts
JEL Classification: 014, 041
Suggested Citation: Suggested Citation