After decades of high growth, the Chinese economy is facing headwinds from slowing productivity growth and a declining workforce that are projected to lower potential growth substantially in the longer term. We project China's potential growth over the medium to long term, showing that potential...

The balanced growth theory and the neoclassical growth model predict that certain macroeconomic variables such as output, consumption, and investment grow at a constant rate. Analytically, it indicates that the consumption-output ratio and the investment-output ratio (termed "great ratios") must...

This paper studies structural change in production networks for intermediate inputs (input-output network) and new capital (investment network). For each network, we document a declining fraction of production by goods sectors and a rising fraction of production by services sectors. We develop a...

We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem, Balanced growth with capital-augmenting technical change is possible when capital has a unitary elasticity of substitution with at least one other factor of production, Thus, a neoclassical growth model with...

We construct a 3-factor, directed technical change growth model that ex-hibits capital-augmenting technical change on the balanced growth path (BGP), circumventing the issues usually caused by the 2-factor Uzawa growth theorem. We calibrate the model to the United States and consider a...

Unlike physical capital, human capital has both embodied and disembodied dimensions. It can be perceived of as skill and acquired knowledge, but also as knowledge spillover effects between overlapping generations and across different skill groups within and across countries. We illustrate the...

We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. The theorem implies that neoclassical growth models need at least three factors of production to be consistent with empirical evidence on both the capital-labor elasticity of substitution and the existence of...

The paper develops a two-sector model of economic growth, using agriculture and industry. The distinguishing feature in this analysis is that land is an essential input in the agricultural sector, but it is also used in the production process of industrial sector, which is assumed to be...

Dynamic models of structural transformation are often non-stationary, precluding balanced growth path (BGP) analysis. We develop a generalization of the BGP concept that we call a Stable Transformation Path (STraP). The STraP characterizes the medium-term dynamics of the economy in a turnpike...

Over the last century, unemployment, vacancy, job-finding and job-loss rates as well as the Beveridge curve have no trend. Yet, the last century has seen the development and diffusion of many information technologies—such as telephones, fax machines, computers, the Internet—which presumably...

Standard dynamic models of structural transformation, without knife-edge and counterfactual parameter values, preclude balanced growth path (BGP) analysis. This paper develops a dynamic equilibrium concept for a more general class of models | an alternative to a BGP, which we coin a Stable...

The present paper revisits a property embedded in most dynamic macroeconomic models: the stationarity of hours worked. First, I argue that, contrary to what is often believed, there are many reasons why hours could be nonstationary in those models, while preserving the property of balanced...

One of the most striking regularities of the growth process is the massive reallocation of labor from agriculture into industry and services. Balanced growth models are commonly used in macroeconomics because they are consistent with the well-known Kaldor facts about economic growth. These...

In much of the world, growth is more stable than it once was. Looking at a sample of twentyfive countries, we find that in sixteen, real GDP growth is less volatile today than it was twenty years ago. And these declines are large, averaging more than fifty per cent. What accounts for the fact...

As a newly emerging factor, data has been widely utilized in producing goods and services, and the nonbalanced growth between digital industries and non-digital industries is significant in recent years. In the digital economy, data has two unique features. One is the fact that data in one...

This paper explores the role of wage fund as the basic source of credit, capital or finance in a dynamic Ricardian model, which consists of three classes of agents: the workers, the capitalist, and the producers of goods. We introduce and develop an elaborate dynamic wage fund model in the...

We adapt the wage contracting structure in Chari (1983) to a dynamic, balanced-growth setting with re-contracting à la Calvo (1983). The resulting wage-rigidity framework delivers a model very similar to that in Jaimovich and Rebelo (2009), with their habit parameter replaced by our probability...

We incorporate Keeping-up-with-the-Joneses (KUJ) preferences into the Blanchard-Yaari (BY) framework and develop, using an AK technology, a model of balanced growth. In this context we investigate status preference, demographic, and pension policy shocks. We find that a higher degree of KUJ...

Is tax competition good for economic growth? The paper addresses this question by means of a simple model of endogenous growth. There are many small jurisdictions in a large federation and individual governments benevolently maximise the welfare of immobile residents. Investment is costly:...

Balanced growth models are commonly used in macroeconomics because they are consistent with the well-known Kaldor facts regarding economic growth. These models, however, are inconsistent with one of the most striking regularities of the growth process - the massive reallocation of labor from...

We present a model in which two of the most important features of the long-run growth process are reconciled: the massive changes in the structure of production and employment; and the Kaldor facts of economic growth. We assume that households expand their consumption along a hierarchy of needs...

This paper is a step in the direction of a larger research project aimed at determining the long run equilibrium value of the euro/dollar real exchange rate. Given this value, one could then give a precise meaning to the notion of undervaluation or overvaluation of the euro, and calculate its...

In an interesting and influential paper Robert Lucas (1993) considering the experience of East Asian small economies, suggests that "on the job" learning could be the principal engine of their miraculous growth in the last 20 years. In this paper I develop an overlapping generation model where...