Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64474
Authors: 
Rada, Codrina
von Arnim, Rudiger
Year of Publication: 
2011
Series/Report no.: 
Working Paper, University of Utah, Department of Economics 2011-05
Abstract: 
This paper explores macroeconomic policies that can sustain structural change in China and India. A two-sector open-economy model with endogenous productivity growth, demand driven output and income distribution as an important determinant of economic activity is calibrated to a 2000 SAM for China and a 1999/2000 SAM for India. Short-run analysis concerns temporary equilibria for output, productivity and employment growth rates in the formal sector. In the long-run, the model allows for multiple equilibria which can describe cases of (a) underdevelopment and structural heterogeneity or (b) sustained growth and development. Several simulation exercises are conducted. Specifically, we consider how changes in investment, wages, labor productivity trend and a depreciation of currency affect the macroeconomy and job creation in the formal sector.
Subjects: 
structural change
endogenous productivity
dual economy
China
India
JEL: 
O11
O41
E26
Document Type: 
Working Paper

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