Growth literature has shown that the Kaldor and Kuznets facts can only be simultaneously explained in a growth model when knife-edge conditions on parameters are introduced. In particular, Kongsamut, Rebelo and Xie (2001) show that in a growth model with Stone-Geary preferences the two sets of facts are compatible when the value of the minimum consumptions is equal to zero. In this paper, by interpreting this value as a state variable, we show that the Kaldor and Kuznets facts can be explained even when the value of the minimum consumption is different from zero. Thus, we show that a growth model with non-homothetic preferences can explain these growth facts even though strong knife-edge conditions are not introduced. Using numerical examples, we also show that the fit of the simulations increases when we assume that the value of the minimum consumptions is positive and when differences across sectoral labour income shares are introduced.

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