Beyond Balanced Growth

BySergio Rebelo, Piyabha Kongsamut, Danyang Xie

June 1, 2001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Agricultural sector, Economic growth, Economic sectors, Financial services, Labor, Manufacturing, Real interest rates, Sustainable growth

Keywords: Agricultural sector, employment share, GBG constraint, GBG path, growth, Kaldor fact, Kaldor facts, Manufacturing, output share, production structure, Real interest rates, structural change, Sustainable growth, WP

Pages:
21
Volume:
2001
DOI:
https://doi.org/10.5089/9781451850758.001
Issue:
085
Series:
Working Paper No. 2001/085
Stock No:
WPIEA0852001
ISBN:
9781451850758
ISSN:
1018-5941

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