On intersectoral allocations, factors substitutability, and multiple long run growth paths

Jean-Pierre Drugeon; Odile Poulsen; Alain Venditti

doi:10.1007/s00199-001-0240-0

On intersectoral allocations, factors substitutability, and multiple long run growth paths

Jean-Pierre Drugeon, Odile Poulsen, Alain Venditti

School of Economics

Research output: Contribution to journal › Article › peer-review

13 Citations (Scopus)

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.

Original language	English
Pages (from-to)	175-183
Number of pages	9
Journal	Economic Theory
Volume	21
Issue number	1
DOIs	https://doi.org/10.1007/s00199-001-0240-0
Publication status	Published - 2003

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10.1007/s00199-001-0240-0

Cite this

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AB - 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.

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