Structural change

Published on August 31, 2020   19 min
Hi, my name is Mariano Torras. I am Professor of Economics at Adelphi University in New York. We are going to be doing a lecture series on Macroeconomics.
As we have already seen, economists consider GDP growth to be one of the principal macroeconomic goals. What we have not heretofore emphasized is changes over time in the structure of the economy. While a growing economy changes greatly over long periods of time in quantitative terms, is important to note that it also changes qualitatively. As we will see, there is every reason to expect that qualitative changes do, over time, assist in the growth process.
In lecture number 2, we described the economy as composed of four sectors, households, businesses, government, and the foreign sector. This was the spending approach to output, with consumption, investment, government spending, and net exports representing the spending categories.
We can also estimate GDP by utilizing the income approach where the categories would be laborers, business owners, landowners, and possibly financiers. But here, we will be classifying according to what is produced. That is, we will be looking at the structural composition of the economy. It is something that has over time changed substantially in pretty much all the world's countries.