On Intersectoral allocations, factors substitutability and multiple long-run growth paths
This article considers a two-sector model of economic growth with “labour-augmenting” intersectoral external effects stemming from the aggregate capital stock. It is shown that equilibrium balanced growth paths with a non-trivial labour allocation scheme become available. A set of sufficient conditions for the existence of multiple equilibrium growth rays is provided and their determinacy properties are then characterised. Finally, examination of a parameterised C.E.S. economy illustrates the central role of non-unitary values for the elasticity of substitution in the multiplicity issue. Copyright Springer-Verlag Berlin Heidelberg 2003
Volume (Year): 21 (2003)
Issue (Month): 1 (01)
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