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STRUCTURAL CHANGE AND A CONSTANT GROWTH PATH IN A THREE-SECTOR GROWTH MODEL WITH THREE FACTORS

Published online by Cambridge University Press:  07 July 2016

Kazunobu Muro
Kazunobu Muro*
Affiliation:
Meiji Gakuin University
*
Address correspondence to: Kazunobu Muro, Faculty of Department of Economics, Meiji Gakuin University, 1-2-37 Shirokanedai, Minato-ku, Tokyo, 108-8636, Japan; e-mail: muro@eco.meijigakuin.ac.jp.
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Abstract

This study proposes the unified framework of a three-sector model with structural change where agriculture, manufacturing, and service sectors have different production technologies. All three sectors use the factors of capital, labor, and land as inputs. The constant-growth path (CGP), which is the trajectory along which the rental rate of capital remains constant, is used to reconcile the Kaldor and Kuznets facts, and plays a role in linking the wage rate and land rent in the three-factors model. Because the prices of agricultural goods and services are determined endogenously, the CGP condition is no longer the knife-edge condition. We find that the dynamic system along the CGP in the three-sector, three-factor model corresponds to the standard two-sector optimal growth model.

Keywords

Three-Sector GDP FunctionStone–Geary Utility FunctionConstant-Growth PathKuznets FactsKaldor Facts
Type
Articles
Information
Macroeconomic Dynamics , Volume 21 , Issue 2 , March 2017 , pp. 406 - 438
Copyright
Copyright © Cambridge University Press 2016 

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Footnotes

The first original version of this paper was presented at the annual conference of the Japanese Economic Association held at Toyama University on 23 June 2013. I would like to thank the editor and two anonymous referees of the journal, and Tamotsu Nakamura (Kobe University), Kazuo Mino (Kyoto University), Hideyuki Adachi (Onomichi University), Ichiro Daitoh (Keio University), Tomoya Sakagami (Kumamoto Gakuen University), and the participants at KMSG (Kobe Macroeconomic Study Group); Yasuyuki Osumi (University of Hyogo), Yunfang Hu (Kobe University), Yoshimasa Aoki (Ritsumeikan University), Jyunko Doi (Kansai University), Jumpei Tanaka (Kitakyusyu University), Takashi Ohno (Ritsumeikan University), Yasunobu Tomoda (Kobe City University of Foreign Studies), Shin Imoto (Onomichi University), Atsushi Miyake (Kobe Gakuin University), Kenji Azetsu (Kita Kyusyu University), Masaya Yasuoka (Kwansei Gakuin University), Takeshi Koba (Kumamoto Gakuen University), Yuji Matsuoka (Kobe University), Akihiko Yanase (Nagoya University), Kazuki Hiraga (Tokai University), Koichiro Sano (Hiroshima University), and the participants at the Hayama conference, Toichiro Asada (Chuo University), Toshihiro Yoshida (Ryukoku University), Yasuyuki Nishigaki(Ryukoku University), Yasuo Kawashima (Chuo University), and Harutaka Takahashi (Meiji Gakuin University), for their very helpful comments and suggestions on previous drafts of this work. Of course, all remaining errors are mine.

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