Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92620
Authors: 
Horiy, Takeo
Ikefuji, Masako
Mino, Kazuo
Year of Publication: 
2011
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 827
Abstract: 
We study structural change in a simple, two-sector endogenous growth model and show that the presence of commodity-specific consumption externalities can be a source of structural change. When the degrees of consumption externalities are different between different goods, the two sectors grow at different rates, whereas the aggregate economy exhibits balanced growth in the sense that capital stock and expenditure grow at the same constant rate. Under the more restrictive condition such that the degrees of consumption externalities are the same, structural change does not occur. We also show that the dependence of the benchmark consumption levels on the past consumption is crucial for the divergent patterns of structural change across countries.
Subjects: 
Structural change
Consumption externalities
Two-sector growth model
Kaldor facts
JEL: 
E21
E30
O10
O41
Document Type: 
Working Paper

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