Growth, sectoral composition, and the evolution of income levels
We assert that the endowments of production factors cause cross-country differences in GDP by generating disparities in the sectoral composition. We characterize the dynamic equilibrium of a two-sector endogenous growth model with several consumption goods that are subject to minimum consumption requirements. In this model, economies with the same fundamentals but different endowments of capitals will end up growing at a common rate, although the long run sectoral composition of GDP will be different. Because the total factor productivity (TFP) in multisector models depends on sectoral structure, these differences in capital endowments will also generate sustained differences in TFPs.
Year of publication: |
2010
|
---|---|
Authors: | Alonso-Carrera, Jaime ; Raurich, Xavier |
Published in: |
Journal of Economic Dynamics and Control. - Elsevier, ISSN 0165-1889. - Vol. 34.2010, 12, p. 2440-2460
|
Publisher: |
Elsevier |
Keywords: | Sectoral composition Two-sector growth model Minimum consumption Total factor productivity |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Can consumption spillovers be a source of equilibrium indeterminacy?
Alonso-Carrera, Jaime, (2008)
-
Welfare implications of the interaction between habits and consumption externalities
Alonso-Carrera, Jaime, (2006)
-
Aspirations, habit formation, and bequest motive
Alonso-Carrera, Jaime, (2007)
- More ...