Hostname: page-component-78c5997874-g7gxr Total loading time: 0 Render date: 2024-11-14T03:22:22.623Z Has data issue: false hasContentIssue false
  • English
  • Français

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.
Get access Rights & Permissions [Opens in a new window]

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 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

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.

References

REFERENCES

Acemoglu, D. and Guerrieri, V. (2008) Capital deepening and nonbalanced economic growth. Journal of Political Economy 116 (3), 467–498 Google Scholar
Alvarez-Cuadrado, F. and Poschke, M. (2011) Structural change out of agriculture: Labor push versus labor pull. American Economic Journal: Macroeconomics 3, 127–158.Google Scholar
Baumol, W.J. (1967) Macroeconomics of unbalanced growth: The anatomy of urban crisis. American Economic Review 57 (3), 415–426.Google Scholar
Baumol, W.J. (2012) The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't. New Haven, CT: Yale University Press.Google Scholar
Buera, F.J. and Kaboski, J.P. (2012a) Scale and the origins of structural change. Journal of Economic Theory 147 (2), 684–712.Google Scholar
Buera, F.J. and Kaboski, J.P. (2012b) The rise of the service economy. American Economic Review 102 (6), 2540–2569.Google Scholar
Caselli, F. and Coleman, W.J. (2001) The U.S. structural transformation and regional convergence: A reinterpretation. Journal of Political Economy 109 (3), 584–616.Google Scholar
Echevarria, C. (1997) Changes in sectoral composition associated with economic growth. International Economic Review 38 (2), 431–452.Google Scholar
Fagerberg, J. (2000) Technological progress, structural change and productivity growth: A comparative study. Structural Change and Economic Dynamics 11, 393–411.Google Scholar
Foellmi, R. and Zweimuller, J. (2008) Structural change, Engel's consumption cycle, and Kaldor's facts of economic growth. Journal of Monetary Economics 55 (7), 1317–1328.Google Scholar
Gollin, D., Parente, S., and Rogerson, R. (2000) The role of agriculture in development. American Economic Review Papers and Proceedings 92 (2), 160–164.CrossRefGoogle Scholar
Goodfriend, M. and McDermott, J. (1995) Early development. American Economic Review 85, 116–133.Google Scholar
Herrendorf, B., Herrington, C., and Valentinyi, A. (2015) Sectoral technology and structural transformation. American Economic Journal: Macroeconomics 7 (4), 104–133.Google Scholar
Herrendorf, B., Rogerson, R., and Valentinyi, A. (2014) Growth and structural transformation. In The Handbook of Economic Growth, 1st ed., Vol. 2, Chap. 6, pp. 855–941. Elsevier.Google Scholar
Hori, T., Ikefuji, M., and Mino, K. (2015) Conformism and structural change. International Economic Review 56 (3), 939–961.Google Scholar
Hu, Y. and Mino, K. (2014) Capital accumulation and structural change in a small-open economy. Pacific Economic Review 19 (5, December), 634–656.Google Scholar
Kongsamut, P., Rebelo, R., and Xie, D. (1997) Beyond Balanced Growth. NBER working series 6159.Google Scholar
Kongsamut, P., Rebelo, R., and Xie, D. (2001) Beyond balanced growth. Review of Economic Studies 68 (4), 869–882.Google Scholar
Kuznets, S. (1966) Modern Economic Growth: Rate, Structure, and Spread. New Haven, CT: Yale University Press.Google Scholar
Laitner, J. (2000) Structural change and economic growth. Review of Economic Studies 67, 545–561.Google Scholar
Lee, D. and Wolpin, K. (2006) Intersectoral labor mobility and the growth of the service sector. Econometrica 74 (1), 1–46.Google Scholar
Mao, R. and Yao, Y. (2012) Structual change in a small open economy: An application to South Korea. Pacific Economic Review 17, 29–56.CrossRefGoogle Scholar
Matsuyama, K. (1992) Agricultural productivity, comparative advantage, and economic growth. Journal of Economic Theory 58, 317–334.CrossRefGoogle Scholar
Matsuyama, K. (2009) Structural change in an interdependent world: A global view of manufacturing decline. Journal of the European Economic Association 7 (2–3), 478–486.Google Scholar
McMillan, M.S. and Rodrik, D. (2011) Globalization, structural change and productivity growth. In Bacchetta, M. and Jense, M. (eds.), Making Globalization Socially Sustainable, pp. 49–84. Geneva: International Labour Organization and World Trade Organization.Google Scholar
McMillan, M.S. and Rodrik, D., and Verduzco-Gallo, Inigo (2014) Globalization, structural change and productivity growth with an update on Africa. World Development 63, 11–32.Google Scholar
Meckl, J. (2002) Structural change and generalized balanced growth. Journal of Economics 77 (3), 241–266.Google Scholar
Muro, K. (2013) A note on the three-sector GDP function. Economic Modelling 31, 18–21.Google Scholar
Murphy, K., Sheleifer, A., and Vishny, R. (1989) Industrialization and the big push. Journal of Political Economy 97 (5), 1003–1026.Google Scholar
Ngai, L.R. and Pissarides, C.A. (2007) Structural change in a multisector model of growth. American Economic Review 97 (1), 429–443.Google Scholar
Piketty, T. (2014) Capital in the Twenty-First Century. Cambridge, MA: The Belknap Press of Harvard University Press.CrossRefGoogle ScholarPubMed
Siegel, J. (1992) The real interest rate from 1800–1990: A study of the U.S. and the U.K. Journal of Monetary Economics 29, 227–252.Google Scholar
Takahashi, H., Mashiyama, K., and Sakagami, T. (2012) Does the capital intensity matter? Evidence from the postwar Japanese economy and other OECD countries. Macroeconomic Dynamics 16 (Supplement 1), 103–116.Google Scholar
Uy, T., Yi, K.M., and Zhang, J. (2013) Structural change in an open economy. Journal of Monetary Economics 60, 667–682.Google Scholar
Uzawa, H. (1961) On a two-sector model of economic growth. Review of Economic Studies 29, 40–47.Google Scholar
Uzawa, H. (1964) Optimal growth in a two-sector model of capital accumulation. Review of Economic Studies 31 (1), 1–24.Google Scholar
Valentinyi, A. and Herrendorf, B. (2008) Measuring factor income shares at the sector level. Review of Economic Dynamics 11 (4), 805–835.Google Scholar
Vollrath, D. (2012) The agricultural basis of comparative development. Journal of Economic Growth 16 (4), 343–370.CrossRefGoogle Scholar