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Structural change, Engel’s consumption cycles and Kaldor’s facts of economic growth


Foellmi, R; Zweimüller, J (2008). Structural change, Engel’s consumption cycles and Kaldor’s facts of economic growth. Journal of Monetary Economics, 55(7):1317-1328.

Abstract

We present a model of structural change due to non-linear Engel-curves for consumer goods. Goods are sequentially introduced starting out as a luxury with high income elasticity and ending up as a necessity with low income elasticity. Although this leads to rising and falling sectoral employment shares, the model exhibits a steady growth path along which the Kaldor facts are satisfied. Extending the basic model to the case of endogenous product innovations shows that complementarities between aggregate and sectoral growth may give rise to multiple equilibria.

Abstract

We present a model of structural change due to non-linear Engel-curves for consumer goods. Goods are sequentially introduced starting out as a luxury with high income elasticity and ending up as a necessity with low income elasticity. Although this leads to rising and falling sectoral employment shares, the model exhibits a steady growth path along which the Kaldor facts are satisfied. Extending the basic model to the case of endogenous product innovations shows that complementarities between aggregate and sectoral growth may give rise to multiple equilibria.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:October 2008
Deposited On:27 Dec 2008 13:47
Last Modified:05 Apr 2016 12:44
Publisher:Elsevier
ISSN:0304-3932
Publisher DOI:https://doi.org/10.1016/j.jmoneco.2008.09.001

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