MIT Press

Skip to Main Content

Table 2.

Calibration Parameters

Parameter	Definition	Baseline Value	Experiments
	Parameter in Utility	1
A_a	Initial TFP in Agriculture	2
A_m	Initial TFP in Manufacturing	1
g_a	Growth Rate of Agricultural TFP (20 years)	1.4
g_m	Growth Rate of Manufacturing TFP (20 years)	1.3
a₁	Capital Parameter in Agriculture Production	.8
a₂	Capital Parameter in Manufacturing Production	.8
	CES Parameter in Agriculture Production	.6, −.3
	CES Parameter in Manufacturing Production	.6, −.3
	Parameter in Agriculture Production	.3
	Parameter in Manufacturing Production	.5
Fiscal Policy
	Government Infrastructure Share in Agriculture	.5	{0.2, .55}
	Tax Rate on Agriculture Income	.2		{0.1, 0.4}
	Tax Rate on Manufacturing Income	.3			{0.1, 0.4}
	Government Subsidy on Agriculture Prices	.1				{0.01, 0.15}
Labor Market
	Labor Market Friction	0					{0, 0.1}

Parameter	Definition	Baseline Value	Experiments
	Parameter in Utility	1
A_a	Initial TFP in Agriculture	2
A_m	Initial TFP in Manufacturing	1
g_a	Growth Rate of Agricultural TFP (20 years)	1.4
g_m	Growth Rate of Manufacturing TFP (20 years)	1.3
a₁	Capital Parameter in Agriculture Production	.8
a₂	Capital Parameter in Manufacturing Production	.8
	CES Parameter in Agriculture Production	.6, −.3
	CES Parameter in Manufacturing Production	.6, −.3
	Parameter in Agriculture Production	.3
	Parameter in Manufacturing Production	.5
Fiscal Policy
	Government Infrastructure Share in Agriculture	.5	{0.2, .55}
	Tax Rate on Agriculture Income	.2		{0.1, 0.4}
	Tax Rate on Manufacturing Income	.3			{0.1, 0.4}
	Government Subsidy on Agriculture Prices	.1				{0.01, 0.15}
Labor Market
	Labor Market Friction	0					{0, 0.1}

CES = constant elasticity of substitution, TFP = total factor productivity.

Source: Authors’ calculations.