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  3. American Economic Journal: Macroeconomics
  4. April 2022
  5. A Theory of Structural Change That Can Fit the Data

A Theory of Structural Change That Can Fit the Data

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Abstract

We study structural change in the historical consumption expenditure of the United States, the United Kingdom, Canada, and Australia over more than a century. We characterize the most general class of preferences in a time-additive setting that admits aggregation of the saving decision and allows us to identify preference parameters from aggregate data. We parameterize and estimate such intertemporally aggregable (IA) preferences and discuss their properties in a dynamic general equilibrium framework with sustained growth. Our preference class is considerably more flexible than the Gorman form or PIGL, giving rise to a good fit of the non-monotonic pattern of structural change.

Citation

Alder, Simon, Timo Boppart, and Andreas Müller. 2022. "A Theory of Structural Change That Can Fit the Data." American Economic Journal: Macroeconomics, 14 (2): 160-206. DOI: 10.1257/mac.20190303

Additional Materials

JEL Classification

  • C51 Model Construction and Estimation
  • E21 Macroeconomics: Consumption; Saving; Wealth
  • L16 Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices
  • N10 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative
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