The Rise of Services and Balanced Growth in Theory and Data | Zendy

Miguel A. LeónLedesma | Zendy; Alessio Moro | Zendy

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The Rise of Services and Balanced Growth in Theory and Data

Author(s) -

Miguel A. LeónLedesma,

Alessio Moro

Publication year - 2020

Publication title -

american economic journal macroeconomics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 10.443

H-Index - 61

eISSN - 1945-7707

pISSN - 1945-7715

DOI - 10.1257/mac.20180373

Subject(s) - economics , investment (military) , monetary economics , goods and services , growth rate , econometrics , growth model , capital accumulation , output elasticity , structural change , macroeconomics , human capital , production (economics) , economy , market economy , mathematics , geometry , politics , political science , law

When measured using NIPA conventions, a two-sector model of balanced growth and structural transformation can account for the mildly declining GDP growth rate, increasing share of services, and increasing real investment/GDP ratio observed in the post-war U.S. economy. These changes induce a decline of 36% in the marginal product of capital and of 5.4% in the real interest rate. By retaining the U.S. calibration, the process of structural transformation can also account, per-se, for cross-country differences in real investment/GDP ratios, which are comparable to those displayed by the U.S. along its growth path.

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