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- Title
A model of unbalanced sectorial growth with application to transition economies.
- Authors
Kylymnyuk, Dmytro; Maliar, Lilia; Maliar, Serguei
- Abstract
This paper studies the implications of a dynamic general equilibrium model with three production sectors, which are agriculture, industry and services. Due to the assumption of increasing returns, our model has multiple equilibria. There are two stable equilibria: one, in which a country produces only agricultural goods and converges to a steady state, and the other, in which a country operates all three sectors and has positive unbalanced long-run growth with contracting agriculture and expanding industry and services. These predictions agree well with the real-world development experiences of rich and poor countries. In the context of our model, we also investigate the evolution of the sectorial composition in the transition countries and find that such countries move to the rich rather than to the poor world.
- Subjects
MATHEMATICAL models of economic development; AGRICULTURAL industries; AGRICULTURAL services; TRANSITION economies; ECONOMIC equilibrium; FARM produce
- Publication
Economic Change & Restructuring, 2007, Vol 40, Issue 4, p309
- ISSN
1573-9414
- Publication type
Article
- DOI
10.1007/s10644-008-9034-8