The Stable Transformation Path
Author(s): Francisco J. Buera, Joseph Kaboski, Martí Mestieri, and Daniel G. O’Connor
Jul 14, 2024 | Working Paper
Abstract
Many growth models lack balanced growth paths (BGPs). Instead, the sectoral, productivity, and capital dynamics change drastically as the economy develops. We define the Stable Transformation Path (STraP), a generalization of the BGP to non-stationary models, for a wide class of models and prove its existence and uniqueness. We use the STraP to evaluate the implications of
benchmark models of structural transformation. Secular structural change can account for a quarter of growth in miracle economies, but it fails to explain the growth experience in the early industrial period.
Locations
- Thailand