Structural change and the Kaldor facts in a growth model with relative price effects and non-Gorman preferences
Journal
Econometrica
ISSN
0012-9682
Type
journal article
Date Issued
2014
Author(s)
Abstract
U.S. data reveal three facts: (1) the share of goods in total expenditure declines at a constant rate over time, (2) the price of goods relative to services declines at a constant rate over time, and (3) poor households spend a larger fraction of their budget on goods than do rich households. I provide a macroeconomic model with non‐Gorman preferences that rationalizes these facts, along with the aggregate Kaldor facts. The model is parsimonious and admits an analytical solution. Its functional form allows a decomposition of U.S. structural change into an income and substitution effect. Estimates from micro data show each of these effects to be of roughly equal importance.
Language
English
HSG Classification
contribution to scientific community
HSG Profile Area
None
Refereed
Yes
Publisher
Econometric Society
Volume
82
Number
6
Start page
2167
End page
2196
Subject(s)
Division(s)
Eprints ID
261580
File(s)![Thumbnail Image]()
Name
B 1.pdf
Size
27.68 KB
Format
Adobe PDF
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