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An Unbalanced Multi-industry Growth Model with Constant Returns: A Turnpike Approach

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  • Takahashi, Harutaka

Abstract

Recent industry-based empirical studies among countries demonstrate that individual industry's per capita capital stock and output grow at industry's own steady state growth rate. The industry growth rate is highly correlated to industry's technical progress measured by total factor productivity TFP) of the industry. Let us refer to this phenomenon as "unbalanced growth among industries." Very few research concerned with this phenomenon has been done yet. Some exceptions are Echevarria (1997), Kongsamut, Rebelo and Xie (2001), and Acemoglu and Guerrieri (2008) among others. However their models and analytical methods are different from mine. Applying the theoretical method developed by McKenzie and Scheinkman in turnpike theory, I now construct a multi-sector optimal growth model with a industry specific Hicks-neutral technical progress and show that each sector's per capita capital stock and output grow at the rate of the sector's technical progress.

Suggested Citation

  • Takahashi, Harutaka, 2010. "An Unbalanced Multi-industry Growth Model with Constant Returns: A Turnpike Approach," MPRA Paper 24833, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24833
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    References listed on IDEAS

    as
    1. Benhabib, Jess & Nishimura, Kazuo, 1979. "On the Uniqueness of Steady States in an Economy with Heterogeneous Capital Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 59-82, February.
    2. Daron Acemoglu & Veronica Guerrieri, 2008. "Capital Deepening and Nonbalanced Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 467-498, June.
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    More about this item

    Keywords

    multisector growth model; optimal growth; turnpike theory;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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