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The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model

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Author Info
Tommaso Ciarli ()
André Lorentz ()
Maria Savona
Marco Valente

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Abstract

The paper contributes to the literature on the relation between structural changes in demand and supply and growth. We develop a macro-economic model with agent-based micro-foundations that articulates the links between production and organisational structures on the supply side, and the endogenous evolution of income distribution on the demand side. The model contains a simplified, though robust, representation of individual firms in the final goods and capital sectors and classes of workers/consumers. The results, in addition to addressing the technical issue of the model's robustness, illustrate the micro- and meso-properties of the simulated growth patterns. In particular, we observe and explain the interactions between technological change, firm organisation, income distribution, consumption behaviour and growth. The analysis performed on the simulated results broadly confirms and further extends the empirical evidence presented in the literature.

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Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2008-13.

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Date of creation: Dec 2008
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Handle: RePEc:esi:evopap:2008-13

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Related research
Keywords: Structural change; consumption; earnings distribution; growth Length 41 pages;

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Find related papers by JEL classification:
D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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