Existence of solutions in continuous-time optimal growth models

This paper studies the existence of solutions in continuous time optimization problems. It provides a theorem whose conditions can be easily checked in most models of the optimal growth theory, including those with increasing returns and multi-sector economies.      

Planning capital-labor substitution and intertemporal equilibrium with a non-linear multi-sector growth model

A non-linear multi-sector model, postulating sectoral production functions and price-responsive demand functions linked around an input-output matrix in a general equilibrium framework, is used to simulate capital-labor substitution on a growth path characterized by intertemporal equilibrium. It demonstrates how the ‘temporary equilibrium’ or ‘sequential temporary equilibrium’ form of models that allow substitution can be extended into an intertemporally indecomposable equilibrium model without abandoning interaction between prices and quantities in the determination of technology and demand. The model is applied to the analysis of the impact of changes in real-wage growth on the characteristics of the equilibrium growth path of the Turkish economy with special attention given to the employment problem.     

Using the manufacturing productivity distribution to evaluate growth theories

Some multi-sector endogenous growth models contain strong predictions about productivity differences across sectors in the form of a distribution or density function. In this paper it is demonstrated that this distribution is left-skewed for a wide range of plausible parameter values. This stands in contrast to the right-skewed shape of the respective empirical distribution estimated by kernel methods for a measure of relative productivity with data for more than 450 four-digit US manufacturing industries during 1958–1996. This difference can be traced back to the assumption of strong intertemporal technological spillover effects that are at work in these models.     

Examining the global environmental impact of regional consumption activities — Part 2: Review of input-output models for the assessment of environmental impacts embodied in trade

This paper offers a detailed review of recently described single- and multi-region input-output models used to assess environmental impacts of internationally traded goods and services. It is the second part of a two-part contribution. In Part 1 [Turner, K., Lenzen, M., Wiedmann, T. and Barrett, J. in press. Examining the Global Environmental Impact of Regional Consumption Activities — Part 1: A Technical Note on Combining Input-Output and Ecological Footprint Analysis; Ecological Economics.] we describe how to enumerate the resource and pollution content of inter-regional and inter-national trade flows with the aim to illustrate an ideal accounting and modelling framework for the estimation of Ecological Footprints.A large number of such environment-economic models have been described but only in the last few years models have emerged that use a more sophisticated multi-region, multi-sector input-output framework. This has been made possible through improvements in data availability and quality as well as computability. We identify six major models that employ multi-sector, multi-region input-output analysis in order to calculate environmental impacts embodied in international trade. Results from the reviewed studies demonstrate that it is important to explicitly consider the production recipe, land and energy use as well as emissions in a multi-region, multi-sector and multi-directional trade model with global coverage and detailed sector disaggregation. Only then reliable figures for indicators of impacts embodied in trade, such as the Ecological Footprint, can be derived.     

Optimal and competitive programs in reachable multi sector models

Summary. We show that in multi-sector optimal growth models, where the technology satisfies a simple reachability condition, infinite horizon programs which satisfy the competitive conditions are optimal. We provide examples of a variety of production models where the reachability condition is satisfied. An example is also provided where the reachability condition is not satisfied and there are competitive programs which are not optimal. The results of the paper are of interest from the standpoint of decentralization in intertemporal economies. Received: March 24, 1994; revised version: October 10, 1998     

The analytical solution of balanced growth of non-linear dynamic multi-sector economic model

In a one-sector neoclassical dynamic economic growth model, a reasonable ratio of investment to consumption exists, i.e., the “Golden Rule of Consumption”. This study is to extend one-sector neoclassical growth model to a multi-sector one. It is assumed that both the production function and the utility function are of Cobb–Douglas type, and the analytical expression of the balanced growth solution of the multi-sector model is provided, mainly including analytical expressions of the optimal distribution coefficient of fixed capital investment, the optimal distribution coefficient of labor hour, the proportion of production, the economic growth rate, the rate of change of the price index, and rental rates of different fixed capital.     

经济结构变化和经济增长

本文试图从生产技术角度构建一个多部门的经济增长模型,同时容纳Kuznets事实和Kaldor事实。模型经济由最终部门和多个中间部门组成,最终产品由各中间产品以CES函数形式生产。各中间部门的技术增长率不同,而这种差异引起经济结构变化,并导致中间产品的相对价格变化,进而决定各中间部门之间要素流动和产值相对份额变动。最终产品的技术增长率为各中间部门的技术增长率加权平均和,并随经济增长单方向变动,变动方向与中间产品之间的替代弹性大小相关。     

经济结构变化和经济增长

本文试图从生产技术角度构建一个多部门的经济增长模型，同时容纳Kuznets事实和Kaldor事实。模型经济由最终部门和多个中间部门组成，最终产品由各中间产品以CES函数形式生产。各中间部门的技术增长率不同，而这种差异引起经济结构变化，并导致中间产品的相对价格变化，进而决定各中间部门之间要素流动和产值相对份额变动。最终产品的技术增长率为各中间部门的技术增长率加权平均和，并随经济增长单方向变动，变动方向与中间产品之间的替代弹性大小相关。     

Does Inflation Grease the Wheels of Adjustment? New evidence from the US economy

This paper presents a new interpretation of the Phillips curve that rests on the process of nominal wage adjustment in a multi-sector economy. Nominal demand growth causes inflation in sectors with full employment, but it speeds up the process of employment creation in sectors with unemployment. As a result, demand-pull inflation is associated with both a reduction in the duration of unemployment and the economy wide average rate of unemployment. The paper provides empirical evidence from the US economy consistent with this claim.     

The Return to Capital and Convergence in a Two Sector Model of Endogenous Growth

This paper obtains a simple algebraic derivation of the transitional dynamics of a two-sector endogenous growth model. This paper finds that the return to capital and the growth rate of output fall over time on the transition path if the initial ratio of physical capital to human capital is lower than the steady state level. It also shows that two sector endogenous growth models are consistent with the evidence on conditional convergence found by Barro (1991) and Mankiw, Romer, and Weil (1991). Neoclassical growth models and endogenous growth models are impossible to distinguish in terms of the falling rate of return on capital or in terms of conditional convergence. [O41]     

Simulating Alternative Development Strategies: Some suggestions From Korea' Experience

This paper reviews the stylized facts about Korea's development strategy which distinguish it from most other developing countries. These stylized facts are then incorporated in two multi-sector models, a dynamic input-output (DIO) model and a computable general equilibrium (CEG) model. Both models are used to ask what might have happened to Korea if she had pursed an inward-looking rather than an outward-looking development strategy. [110]     

核心通货膨胀:理论模型与经验分析

现有的核心通货膨胀计算方法假设各种商品和服务的价格变化可以表示为核心通货膨胀与异质性相对价格变化之和,然而这种价格变化的分解方式既缺乏理论基础又违背经济直觉。本文将经典的新凯恩斯模型推广到多部门情形,证明了多部门新凯恩斯菲利普斯曲线,提出了各部门商品价格变化的理论分解公式。以这个分解公式为理论基础,本文提出了估计核心通货膨胀的计量经济模型及其两阶段估计方法,给出了根据稳态权重估计核心通货膨胀的简便方法,估计出了我国的核心通货膨胀。有效性检验表明,根据两阶段估计方法和基于稳态权重的估计方法得到的核心通货膨胀都是有效的核心通货膨胀度量。     

Incorporating stakeholders' perspectives into models of new technology diffusion: The case of fuel-cell vehicles

The literature on the modeling of diffusion of technologies typically uses historical data to calibrate a model. For cases where data on the diffusion of comparable technologies are not available and where high multi-sector stakes are involved, models that use more specific information may be useful. The potential transition to alternative transportation vehicle technologies and fuels, like fuel-cell vehicles and hydrogen, would be an example of such cases. We propose an integration of theoretical frameworks on the diffusion of innovations with data on stakeholders' opinions, to develop estimates of FCVs' market-share evolution. Our estimates of the time scales required for the market, particularly for the initial stages, are longer than those obtained in other studies.     

Returns to scale and externalities in the consumption and investment sectors

Using data on US manufacturing, I estimate internal returns to scale and external effects for the consumption and investment sectors. I construct panels of data at the industry level and use results of gross output production function estimation to derive implied estimates in a value added specification. For the investment sector, returns to scale appear to be slightly increasing, with evidence of a positive external effect. For consumption, the evidence indicates decreasing to constant returns to scale. I discuss the implications of these results for the empirical plausibility of indeterminacy in recent multi-sector models of the business cycle.     

Aggregate productivity and aggregate technology

Aggregate productivity and aggregate technology are meaningful but distinct concepts. We show that a slightly modified Solow productivity residual measures changes in economic welfare, even when productivity and technology differ because of distortions such as imperfect competition. Our results imply that aggregate data can be used to measure changes in welfare, even when disaggregated data are needed to measure technical change. We then present a general accounting framework that identifies several new non-technological gaps between productivity and technology, gaps reflecting imperfections and frictions in output and factor markets. Empirically, we find that these gaps are important, even though we abstract from variations in factor utilization and estimate only small average sectoral markups. The evidence suggests that the usual focus on one-sector DSGE models misses a rich class of important propagation mechanisms that are present only in multi-sector models.     

Sticky prices or rational inattention – What can we learn from sectoral price data?

This paper derives stylised facts on sectoral inflation dynamics and confronts these facts with two popular theoretical models of price setting. Based on sectoral price responses to macroeconomic shocks estimated from an approximate factor model, we find that the frequency of price changes explains a relevant share of the cross-sectional variation of the speed and size of responses. Moreover, there is little evidence that the volatility of sectoral inflation due to idiosyncratic shocks dampens the size and speed of the responses to macroeconomic shocks. These findings support a multi-sector model with sticky prices rather than a rational-inattention model. We derive the results from different modelling and sampling decisions proposed in the literature, and we find that the explanatory power of the frequency of price changes for the speed of response to a macroeconomic shock proves robust in the face of these decisions. Other results are sensitive with respect to the choice of the factor model and the treatment of outliers.     

Mapping prices into productivity in multisector growth models

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between the productivity indices for value added and for gross output. We illustrate their significance for growth accounting using the well known model of Greenwood et al. (in Am Econ Rev 87(3):342–362, 1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). We investigate the role of intermediate goods in their framework and find that, taking into account the composition of intermediates, ISTC may well account for between 93 and 96% of post-war US growth.     

Capital Malleability, Emission Leakage and the Cost of Partial Climate Policies: General Equilibrium Analysis of the European Union Emission Trading System

Computable general equilibrium (CGE) models are the premier analytical platform for assessing the economic impacts of climate change mitigation. But these models tend to treat physical capital as “malleable”, capable of reallocation among sectors over the time-period for which equilibrium is solved. Because the extent to which capital adjustment costs might dampen reallocation is not well understood, there is concern that CGE assessments understate the true costs of greenhouse gas (GHG) reduction policies. This paper uses a multi-region, multi-sector CGE model to investigate cap-and-trade schemes, such as the European Union Emission Trading System which cover a subset of the economy, elucidating the effects of capital malleability on GHG abatement, the potential for emission leakage from abating to non-abating sectors, and the impacts on welfare. To simplify the complex interactions being simulated within the CGE model, that analysis is complemented with an analytical model. A partial climate policy results in negative internal carbon leakage, with emissions declining not only in capped sectors but also in non-regulated ones. This result is stronger when capital is intersectorally mobile. Interestingly, in partial climate policy settings capital malleability can amplify or attenuate welfare losses depending on the attributes of the economy.     

Modeling structural change using early Soviet data

This paper describes a multi-sector, multi-period, economy-wide model constructed by applying linear programming techniques to an input-output system. The model is designed to provide a flexible, cost-effective tool for testing the impact of alternative development policies on consumption levels, capital stocks, output growth rates, and rate of technological change. Early Soviet data are used to show how the model can generate a problem-free expansion path as a reference. The model and reference solution are then used to decompose historical experience, measuring the intersectoral and intertemporal impact of major historical events on the economy's performance.