Template-type: ReDIF-Paper 1.0
Author-Name: Moro, Alessio
Author-Email: amoro@unica.it
Author-Workplace-Name: University of Cagliari
Author-Name: Valdes, Carlo
Author-Email: carlo.valdes@cdp.it
Author-Workplace-Name: Cassa Depositi e Prestiti
Title: Stuctural transformation in general equilibrium
Abstract: Models of structural change in general equilibrium are commonly used to 
	 address a number of questions regarding the behaviour of the 
	 macro-economy. In this paper, we first revise the main mechanisms at 
	 work in generating structural change in a multi-sector environment. 
	 These effects emerge due to both an interaction between consumers' 
	 preferences and technological change and to different income 
	 elasticities of the various goods and services entering the utility 
	 function. Next, we address the issue of measurement of these models when 
	 comparing them to the data. The typical assumption in multi-sector 
	 models is to define GDP as aggregate output in units of a numeraire 
	 good, often chosen to be the investment good. However, this procedure is 
	 equivalent to deriving nominal GDP in the data (i.e. total output of the 
	 economy in units of one particular good), and not to deriving a measure 
	 of real GDP. We then discuss how GDP in the model should be measured to 
	 provide a statistic that is comparable with the data in national 
	 accounts. The last part of the paper is devoted to show how structural 
	 transformation from manufacturing to services, when appropriately 
	 compared to the data, generates a decline in GDP growth and volatility 
	 along the growth path of an economy. 
Classification-JEL: O33, C67, C68, E25, E32
Keywords: Technological Change, Structural Change, Growth, Volatility
Series: UNU-MERIT Working Papers
Creation-Date: 20191204
Number: 2019-049
File-URL: https://unu-merit.nl/publications/wppdf/2019/wp2019-049.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2019049