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The analytical solution of balanced growth of non-linear dynamic multi-sector economic model

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  • Zhang, Jin Shui
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    Abstract

    In a one-sector neoclassical dynamic economic growth model, a reasonable ratio of investment to consumption exists, i.e., the "Golden Rule of Consumption". This study is to extend one-sector neoclassical growth model to a multi-sector one. It is assumed that both the production function and the utility function are of Cobb-Douglas type, and the analytical expression of the balanced growth solution of the multi-sector model is provided, mainly including analytical expressions of the optimal distribution coefficient of fixed capital investment, the optimal distribution coefficient of labor hour, the proportion of production, the economic growth rate, the rate of change of the price index, and rental rates of different fixed capital.

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    Bibliographic Info

    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 28 (2011)
    Issue (Month): 1-2 (January)
    Pages: 410-421

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    Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:410-421

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    Web page: http://www.elsevier.com/locate/inca/30411

    Related research

    Keywords: CGE Neoclassical economic growth model Multi-sector dynamic model Golden Rule of Consumption Optimal accumulation rate;

    References

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    1. McKibbin, W.J. & Wilcoxen, P.J., 1995. "The Theoretical and Empirical Structure of the G-Cubed Model," Papers 118, Brookings Institution - Working Papers.
    2. Stephen J. Turnovsky, 1997. "International Macroeconomic Dynamics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262201119, December.
    3. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    4. Li, Jinlu & Lin, Shuanglin, 2008. "Existence and uniqueness of steady-state equilibrium in a two-sector overlapping generations model," Journal of Economic Theory, Elsevier, vol. 141(1), pages 255-275, July.
    5. Chilarescu, Constantin, 2008. "An analytical solutions for a model of endogenous growth," Economic Modelling, Elsevier, vol. 25(6), pages 1175-1182, November.
    6. Chander, Parkash, 1983. "The nonlinear input-output model," Journal of Economic Theory, Elsevier, vol. 30(2), pages 219-229, August.
    7. Di Vita, Giuseppe, 2008. "Capital accumulation, interest rate, and the income-pollution pattern. A simple model," Economic Modelling, Elsevier, vol. 25(2), pages 225-235, March.
    8. Herrendorf, Berthold & Valentinyi, Akos, 2002. "On the Stability of the Two-Sector Neoclassical Growth Model with Externalities," CEPR Discussion Papers 3435, C.E.P.R. Discussion Papers.
    9. Zou, Benteng, 2006. "Vintage technology, optimal investment and technology adoption," Economic Modelling, Elsevier, vol. 23(3), pages 515-533, May.
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    Cited by:
    1. OA. Carboni & P. Russu, 2012. "A Model of Economic Growth with Public Finance: Dynamics and Analytic Solution," Working Paper CRENoS 201229, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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