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Table 2.
Calibration Parameters
ParameterDefinitionBaseline ValueExperiments
 Parameter in Utility      
Aa Initial TFP in Agriculture      
Am Initial TFP in Manufacturing      
ga Growth Rate of Agricultural TFP (20 years) 1.4      
gm 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, 0.1} 
ParameterDefinitionBaseline ValueExperiments
 Parameter in Utility      
Aa Initial TFP in Agriculture      
Am Initial TFP in Manufacturing      
ga Growth Rate of Agricultural TFP (20 years) 1.4      
gm 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, 0.1} 

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

Source: Authors’ calculations.

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