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Evolution of the Relative Price of Goods and Services in a Neoclassical Model of Capital Accumulation

This paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal optimizing m...

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Bibliographic Details
Main Author: Klyuev, Vladimir
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2004
Series:IMF Working Papers
Subjects:
Capital Accumulation
Neoclassical
Investment
One, Two, And Multisector Growth Models
Labour; Income Economics
Capital And Total Factor Productivity
Cost
Industrial Productivity
Production
Aggregate Labor Productivity
Unemployment
Skills
Intangible Capital
Total Factor Productivity
Aggregate Human Capital
National Accounts
Labor
Economic Growth Of Open Economies
Labor Productivity
Saving And Investment
Labor Economics: General
Investments: General
Macroeconomics
Occupational Choice
Wages
Capacity
Capital
Intergenerational Income Distribution
Human Capital
Employment
Capital Productivity
Production And Operations Management
Labor Economics
United States
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:This paper provides an explanation for the secular increase in the price of services relative to that of manufactured goods that relies on capital accumulation rather than on an exogenous total factor productivity growth differential. The key assumptions of the two-sector, intertemporal optimizing model are relatively high capital intensity in the production of goods and limited cross-border capital mobility, allowing the interest rate to vary. With plausible parameterization, the model also predicts a decline in the employment share of the goods sector over time
Physical Description:18 pages
ISBN:9781451874686

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