Multisector Growth Models (eBook)

Contents 5
Preface 10
Acknowledgement 12
1 Introduction: Orientation and Focus 13
Introduction 13
Organization of the book 16
2 The Preliminaries 20
Microeconomic foundations 21
Consumer preferences 21
Production technologies 24
The Heckscher-Ohlin-Samuelson model 29
The behavior of households 30
The price taking firm 31
Characterization of equilibrium 32
Comparative statics 34
Generalizing the basic model 38
The case where Mt=N 39
The case where Mt< N
Comparative statics 40
The special case of a home (non-traded) good 41
The environment 42
Behavior of households and firms 42
The characterization of equilibrium 43
Selected comparative statics 45
Appendix: determinants of home-good price 51
3 The Two Sector Ramsey Model 55
The model environment 56
Household behavior 56
Production 62
Equilibrium 63
Definition and characterization of equilibrium 63
Selected comparative statics 68
Growth in efficiency and number of workers 71
The behavior of households 71
Production 74
Equilibrium 75
Comparative statics 76
An algebraic example 77
A numerical example 80
Parameter estimation 81
Empirical results 82
Conclusion 86
4 The Three-Sector Ramsey Model 88
The model environment 89
No-arbitrage between capital and landassets 90
Intra-temporal behavior of the household 91
Firm behavior 93
Equilibrium 95
Selected comparative statics 100
Stone-Geary preferences 102
Household behavior 103
Equilibrium 104
A numerical example 107
Parameter estimation 107
Empirical results 108
Conclusion 114
Appendix: income and expenditure distribution 115
Distinguishing individual expenditure from that of the representative household 117
Distinguishing individual income from that of the representative household 118
5 Extensions to the Three-Sector Model 122
Intermediate inputs of production 123
Firms 124
Equilibrium with intermediate inputs of production 125
Comparative statics 129
Vertical market structures 131
Firms 131
Intra-temporal equilibrium 132
Inter-temporal equilibrium 135
An alternative specification 136
Composite capital 137
Asset pricing and the Euler condition 138
Specification of composite capital 140
Intra-temporal equilibrium 142
Inter-temporal equilibrium 143
Discussion 145
Government 146
Government consumption and revenues 147
Firms 149
Intra-temporal equilibrium 150
Inter-temporal equilibrium 153
A numerical example 155
Parameter estimation 155
Empirical results 156
Multiplier effects of a technology shock 161
Conclusions 164
6 The Extended Three-Sector Model 167
The model 167
Households 168
Government 172
Firms 173
Intra-temporal equilibrium 175
Reducing the dimensionalityof the system 178
Inter-temporal equilibrium 181
Numerical analysis 182
Parameter estimation 183
Validation 184
Empirical results 190
Trade reform 196
Conclusion 203
7 A Three-Sector -- Two-Country World 206
A two-country world with capital mobility 208
Households and firms 209
Basic identities 212
Equilibrium 213
Reducing the dimensionality of the model 215
Inter-temporal equilibrium 218
A two-country world without capital mobility 221
Households and firms 221
Equilibrium 222
Reducing the dimensionality of the model 224
Inter-temporal equilibrium 226
Numerical examples 229
The capital mobility model 230
Model without capital mobility 237
Conclusions 242
8 Data Issues and the Social Accounting Matrix 246
Introduction 246
A two-sector, closed economy SAM 249
A non-technical description of the two-sector SAM 250
A more technical description of the two-sector SAM 253
Using the SAM to calibrate the empirical two-sector model 256
A three-sector, open economy SAM 264
Using the SAM to calibrate the empirical three-sector model 269
A three-sector, open economy SAMwith intermediate products 272
Using the SAM to calibrate the empirical three-sector model with intermediateinputs 272
A three-sector SAM with composite capital and government 277
Using the SAM to calibrate the empirical three-sector model with government and composite capital 278
Conclusion 285
Appendix: Sector definitions 286
9 Solution Methods in Transition Dynamics 289
Time-elimination method 289
L'Hopital's rule approach 294
Eigenvalues-eigenvectors approach 295
Mathematica code 302
Backward integration method 307
References 310
Author Index 317
Subject Index 319