"Beyond balanced growth" : some further results
Kongsamut et al. (2001) have demonstrated that contrary to earlier opinion balanced growth of aggregated variables and structural change can be simultaneously generated in a model of exogenous technological progress. That is, they have presented a model that is simultaneously consistent with Kaldor’s stylized facts and stylized facts of labor reallocation between sectors. However, they used in their model sectoral production functions that differ only by a multiplicative constant. Thus their model is not consistent with the empirical fact of different labor shares of income across sectors. We generalize their model and show that a model of exogenous growth can simultaneously be consistent with Kaldor’s stylized facts, stylized facts of labor reallocation and different labor shares of income across sectors (i.e. completely different sectoral production functions).
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