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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 16, No. 3, pp.343-362
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2003
Received 03 Feb 2003 Revised 07 Apr 2004

Consumption Structure and the Pattern of Economic Growth

Junko Doi
Faculty of Economics, Kyoto Sangyo University, Kamigamo Motoyama, Kita-ku, Kyoto, 603-8555, Japan, Tel: +81-75-705-1768, Fax: +81-75-705-1949 jdoi@cc.kyoto-su.ac.jp

JEL Classification: O41, E21, O31

Abstract

This paper studies the relationship between consumption structure and economic growth by constructing a two-sector variety expanding model. We classify the goods into two groups based on difference in the elasticity of substitution, and consider how the change of consumption structure affects economic growth. We consider the change as shifts in demand from the goods having higher elasticity (more competitive) to the other (less competitive) goods. As a result, we find that the growth rate is U-shaped.

Keywords:

Consumption structure, Sector-specific R&D, Two-sector economic growth

Acknowledgments

I am grateful to Hideyuki Adachi (University of Marketing and Distribution Sciences), Kazuo Mino (Osaka University) and Kosuke Aoki (CPER) for very helpful comments and suggestions. Comments on an earlier version from Masayuki Otaki (University of Tokyo) at Tokyo University, Japan during the Japanese Economic Society 1999 Fall Conference are also gratefully acknowledged.

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