Structural Bias of Our Economic Growth at Business Cycles: Based on Substitution Elasticity among Industries
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| Title | Structural Bias of Our Economic Growth at Business Cycles: Based on Substitution Elasticity among Industries
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| Author | Wei Qiang and Fan Gang |
| Organization | Chinese Academy of Social Sciences |
| Email | wq168168@pku.edu.cn;fangang@neri.org.cn |
| Key Words | Structuralism; Growth Bias; Substitution Elasticity; Business cycles |
| Abstract | Economic fluctuations are not only the normal phenomena conform to market discipline but also the crucial parts of economic growth. This paper constructs a general equilibrium model with constant elasticity of substitution among industries. The theoretical analysis shows that the growth of aggregate output would be determined by the industry that is growing more slowly when the elasticity is less than 1. Empirical research shows that the substitution elasticity among our industries is between 0 and 1. Therefore, the policy implication of this paper is that in order to maintain sustained an healthy development of the national economy, it is important to stabilize "the short board" and balance economic structure. |
| Serial Number | WP963 |
| Time | 2015-11-24 |
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