Structural change, inequality, and development

Language

English

Main themes

In this course, students learn how basic macroeconomic models can be used to answer questions like the following:

• How can technology diffusion be encouraged and how does it affect the evolution of income differences across countries?
• What is the effect of an increase in agricultural productivity on economic growth?
• Are well-functioning informal institutions beneficial or harmful for economic development?
• How can failures in one sector affect the whole economy?
• Under which circumstances is coordination among individuals important for economic development?
• How does robotisation affect the labor income share?
• How is the evolution of income and wealth inequality affected by financial market imperfections?
• How does redistributing income from rich to poor households or taxing capital income affect capital accumulation, innovation, and economic growth?

Learning outcomes

At the end of this learning unit, the student is able to :
1	The goal of this course is to improve students' understanding of the above-mentioned topics and should learn to rigorously address various related issues.

Content

Detailed content:
Part 1: Economic development and structural change
    The evolution of income differences between countries and within countries (empirical)
    The diffusion of technology to developing countries
        A model of technology diffusion
            Endogenous distance to the technology frontier
            Technology suitability
    Consumer demand and structural change
        Stone-Geary preferences and Engel curves
        Structural change and endogenous growth in a two-sector model
    Dual economy models
        Urbanisation
        Formal and informal activities
    The ‘O-ring’ theory of economic development
    Coordination failures
        Corruption and endogenous career choices
        Externalities of aggregate demand
Part 2: Inequality and growth
    Neoclassical distribution theory
        Robotisation and the share of labour income
    Capital market imperfections, inequality and growth
        One-period life model with bequests
    Diminishing returns to individual investment
    Increasing returns and indivisibilities of investment
    Distribution of factor income and growth
        Infinite horizon (Ramsey)
        Nested generations
        Growth, distribution and political economy
    Distribution of personal income and growth
Homothetic preferences
        Indivisibilities of consumption and demand-driven innovation

Evaluation methods

There is a final written exam at the end of the course

Other information

Course in charge of Unamur BUT taught at UCLouvain
Prerequisites: Undergraduate Macroeconomics course
Reception: 2 hours per week

Bibliography

• Plusieurs chapitres des ouvrages suivants :
      « Introduction to Modern Economic Growth » ; Daron Acemoglu ; Princeton University Press ; 2009.
      « Income Distribution in Macroeconomic Models » ; Gioseppe Bertola, Reto Föllmi, Josef Zweimüller ; Princeton University Press ; 2006. 
  Divers articles indiqués pendant le cours.
  

Teaching materials

• Diapositives (en anglais) et lectures complémentaires - Lecture slides and complementary readings.

Faculty or entity

> ECON