Structural Change and Generalized Balanced Growth

No 233, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: This paper addresses the criticism that balanced growth models are inconsistent with the dynamics of structural change typical for the process of economic growth. Using a sectoral disaggregated version of a research--driven growth model, we develop the concept of a generalized balanced growth path (GBGP). The GBGP preserves decisive properties of the balanced growth path analyzed in aggregated growth models. Along a GBGP, aggregate variables grow at constant rates (balanced growth) while disaggregated variables grow at non--constant rates. The aggregated model's implications for the behavior of aggregates are robust with respect to structural dynamics.

Date: 2000-08-01
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Working Paper: Structural change and generalized balanced growth (1999)
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