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On Intersectoral allocations, factors substitutability and multiple long-run growth paths

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  • Jean-Pierre Drugeon
  • Odile Poulsen
  • Alain Venditti

Abstract

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

Suggested Citation

  • Jean-Pierre Drugeon & Odile Poulsen & Alain Venditti, 2003. "On Intersectoral allocations, factors substitutability and multiple long-run growth paths," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(1), pages 175-183, January.
  • Handle: RePEc:spr:joecth:v:21:y:2003:i:1:p:175-183 DOI: 10.1007/s00199-001-0240-0
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    Citations

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    Cited by:

    1. Aditya Goenka & Odile Poulsen, 2005. "Indeterminacy and labor augmenting externalities," Journal of Economics, Springer, vol. 86(1), pages 143-166, December.
    2. Takumi Naito, 2013. "Aid for trade, infrastructure, and growth," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(6), pages 886-909, December.
    3. Nishimura, Kazuo & Venditti, Alain, 2002. "Intersectoral Externalities and Indeterminacy," Journal of Economic Theory, Elsevier, vol. 105(1), pages 140-157, July.
    4. Alonso-Carrera, Jaime & Freire-Seren, Maria Jesus, 2004. "Multiple equilibria, fiscal policy, and human capital accumulation," Journal of Economic Dynamics and Control, Elsevier, vol. 28(4), pages 841-856, January.
    5. Brito, Paulo & Venditti, Alain, 2010. "Local and global indeterminacy in two-sector models of endogenous growth," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 893-911, September.
    6. Been‐Lon Chen & Shun‐Fa Lee, 2012. "Intersectoral Spillovers, Relative Prices and Development Traps," Review of Development Economics, Wiley Blackwell, vol. 16(2), pages 243-261, May.
    7. Poulsen, Odile & Svendsen, Gert Tinggaard, 2005. "The Long and Winding Road: Social Capital and Commuting," Working Papers 05-6, University of Aarhus, Aarhus School of Business, Department of Economics.
    8. Goenka, Aditya & Poulsen, Odile, 2004. "Factor Intensity Reversal and Ergodic Chaos," Working Papers 04-13, University of Aarhus, Aarhus School of Business, Department of Economics.
    9. Poulsen, Odile & Svendsen, Gert Tinggaard, 2004. "Social Capital and Market Centralisation: A Two-Sector Model," Working Papers 04-12, University of Aarhus, Aarhus School of Business, Department of Economics.
    10. Been-Lon Chen & Shun-Fa Lee, 2009. "General Fund Financing, Earmarking, Economic Stabilization, and Welfare," Public Finance Review, , vol. 37(5), pages 507-538, September.
    11. Harutaka Takahashi, 2008. "Optimal balanced growth in a general multi-sector endogenous growth model with constant returns," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 31-49.
    12. Lee, Shun-Fa, 2010. "Tariff, Growth, and Welfare," MPRA Paper 27486, University Library of Munich, Germany.
    13. Naito, Takumi, 2006. "Growth, revenue, and welfare effects of tariff and tax reform: Win-win-win strategies," Journal of Public Economics, Elsevier, pages 1263-1280.
    14. Takumi Naito & Ryoji Ohdoi, 2011. "A two-country model of trade and growth with intersectoral knowledge spillovers," Journal of Economics, Springer, vol. 103(1), pages 39-58, May.
    15. Poulsen, Odile & Svendsen, Gert Tinggaard, 2005. "Love Thy Neighbor: Bonding versus Bridging Trust," Working Papers 05-7, University of Aarhus, Aarhus School of Business, Department of Economics.
    16. Nishimura, Kazuo & Venditti, Alain, 2004. "Indeterminacy And The Role Of Factor Substitutability," Macroeconomic Dynamics, Cambridge University Press, vol. 8(04), pages 436-465, September.

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    Keywords

    Keywords and Phrases: Intersectoral labour-augmenting externalities; Long-run multisector growth; Global indeterminacies.; JEL Classification Numbers: E32; O41.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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