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A complete characterization of equilibrium paths in a labour-less two-sector model of optimal growth

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  • Guerrazzi, Marco

Abstract

In this paper, I develop a two-sector growth model in which the output of each industry is obtained only by means of capital. From a theoretical perspective, this setting reveals that the determinacy of the equilibrium path is possible even when the production technology available in the industry of consumption goods is not necessarily convex. Moreover, form a numerical point of view, I show that whenever the first-best solution of the model is tailored on the US economy, such a theoretical framework relaxes the complementarity between the propensities to consume and to save and it is also consistent with the observed countercyclical pattern of the relative price of capital goods.

Suggested Citation

  • Guerrazzi, Marco, 2025. "A complete characterization of equilibrium paths in a labour-less two-sector model of optimal growth," MPRA Paper 124225, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124225
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    1. Guerrazzi, Marco, 2025. "A two-sector model of optimal growth in which labour is employed only in the industry of consumption goods: A complete characterization of equilibrium paths," MPRA Paper 126101, University Library of Munich, Germany.
    2. Guerrazzi, Marco, 2025. "A two-sector model of optimal growth in which labour is employed only in the industry of investment goods: A complete characterization of equilibrium paths," MPRA Paper 126299, University Library of Munich, Germany.

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    Keywords

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    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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