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Structural change in an open economy

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  • Structural change in an open economy
  • Uy, Timothy; Yi, Kei-Mu; Zhang, Jing
  • University of Southern California


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Title Structural change in an open economy
Similar Titles
Material Type Reports
Author(English)

Uy, Timothy; Yi, Kei-Mu; Zhang, Jing

Publisher

[Los Angeles]:University of Southern California

Date 2013-06
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Trade
Economy < Economic Administration
Holding University of Southern California

Abstract

We study the importance of international trade in structural change. Our framework has both productivity and trade cost shocks, and allows for non-unitary income and substitution elasticities. We calibrate our model to investigate South Korea’s structural change between 1971 and 2005. We find that the shock processes, propagated through the model’s two main transmission mechanisms, non-homothetic preferences and the open economy, explain virtually all of the evolution of agriculture and services labor shares, and the rising part of the hump-shape in manufacturing. Counterfactual exercises show that the role of the open economy is quantitatively important for explaining South Korea’s structural change

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