Topic: Business Cycle during Structural Change: Arthur Lewis’ Theory from a Neoclassical Perspective
Speaker:Kjetil Storesletten, Professor of Macroeconomics at University of Oslo
Date: June 17 (Wednesday), 13:30-15:00
Location: Zoom
Language: English
Abstract:
We document that the nature of business cycles evolves over the process of development and structural change. In countries with large declining agricultural sectors, aggregate employment is uncorrelated with GDP. During booms, employment in agriculture declines while labor productivity increases in agriculture more than in other sectors. We construct a unified theory of business cycles and structural change consistent with the stylized facts. The focal point of the theory is the simultaneous decline and modernization of agriculture. As capital accumulates, agriculture becomes increasingly capital intensive as modern agriculture crowds out traditional agriculture. Structural change accelerates in booms and slows down in recessions. We estimate the model and show that it accounts well for both the structural transformation and the business cycle fluctuations of China.
About the speaker:
Kjetil Storesletten is a Professor of Macroeconomics at University of Oslo. He obtained his PhD at Carnegie Mellon University in 1995. He has been a Monetary Advisor at Minneapolis Fed and an Associate Professor at Stockholm University (IIES). He was President of the European Economic Association in 2019. He is a joint recipient of the Sun Yefang 2012 Award from the Chinese Academy of Social Sciences (prize granted for the paper “Growing Like China“). He is a former managing editor (2006-2010) and Chairman (2013-2017) of the Review of Economic Studies. He is the Principal Investigator of an ERC Advanced Grant. He is a Fellow of the Econometric Society, EEA, and CEPR. His research interests include macroeconomics, inequality, China, development, asset pricing, and political economy. He has published papers in all top journals: Quarterly Journal of Economics American Economic Review, Econometrica, Journal of Political Economy.
