Multiplicity, Overtaking and Convergence in the Lucas Two-Sector Growth Model
AbstractThis paper provides the complete closed-form solution to the Lucas two-sector model of endogenous growth. We study the issues of existence, unique-ness, multiplicity, positivity, transitional dynamics and long-run growth, re-lated to the competitive equilibrium paths. We identify the parameter range where the different results hold and deduce the entire trajectories for the original variables. We revise the results on convergence and overtaking which arise from this model, and prove that the parameterization currently used as the background for an explanation of economic miracles and disasters, is not satisfactory because of its counterintuitive implications.
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Bibliographic InfoPaper provided by FEDEA in its series Working Papers with number 2002-17.
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-07-21 (All new papers)
- NEP-DEV-2002-07-21 (Development)
- NEP-MAC-2002-07-21 (Macroeconomics)
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