Structural change, inequality, and development [ECONM828]

Learning outcomes

This course studies macroeconomic aspects of economic development, growth, and inequality with a focus on theoretical analyses.

Objectives

The goal of this course is to improve student’s understanding of the studied topics (see "Content") and to enable them to rigorously address various related issues.

Content

Part 1: Economic development and structural change

• The evolution of income differences across and within countries (empirical)
• The diffusion of technologies towards developing countries
  • A model of technology diffusion
    • Endogenous distance to the technological frontier
    • Appropriateness of technologies
• Consumer demand and structural change
  • Stone-Geary preferences and Engel curves
  • Structural change and endogenous growth in a two-sector model
• Dual economy models
  • Urbanization
  • Formal and informal activities
• The O-ring theory of economic development
• Coordination failures
  • Rent-seeking and endogenous career choices
  • Aggregate demand externalities

Part 2: Inequality and growth

• The neoclassical theory of distribution
  • Robotization and the labor income share
• Capital market imperfections, inequality, and growth
  • One-period lifetime with bequest model
    • Decreasing returns to individual investment
    • Increasing returns and investment indivisibilities
• Factor income distribution and growth
  • Infinite horizon (Ramsey)
  • Overlapping generations
  • Growth, distribution, and political economy
• Personal income distribution and growth
  • Homothetic preferences
  • Consumption indivisibilities and demand-driven innovation

Exercises description

Exercises have to be prepared at home and are discussed in class.