Abstract
The productivity growth slowdown that started in the 1970s presents a challenge to Kaldor's growth facts and the one-sector growth model. We ask: What natural modification of the growth model can generate a prolonged productivity growth slowdown? We show that the two-sector version with separate consumption and investment sectors has a balanced growth path equilibrium along which productivity growth slows down if two conditions hold: real GDP is measured with the Fisher index; productivity growth in the consumption sector slows down. We also show that real GDP measured with the Fisher index is a welfare measure in the two-sector version.
Original language | English (US) |
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Article number | 104200 |
Journal | Journal of Economic Dynamics and Control |
Volume | 130 |
DOIs | |
State | Published - Sep 2021 |
Keywords
- Fisher index
- Kaldor's growth facts
- Productivity growth slowdown
- Two-sector growth model
ASJC Scopus subject areas
- Economics and Econometrics
- Control and Optimization
- Applied Mathematics