Balanced growth revisited : a two-sector model of economic growth

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Show simple item record Whelan, Karl 2008-06-13T16:08:29Z 2008-06-13T16:08:29Z 2000-12-05
dc.description.abstract The one-sector Solow-Ramsey model is the most popular model of long-run economic growth. This paper argues that a two-sector approach, which distinguishes the durable goods sector from the rest of the economy, provides a far better picture of the long-run behavior of the U.S. economy. Real durable goods output has consistently grown faster than the rest of the economy. Because most investment spending is on durable goods, the one-sector model's hypothesis of balanced growth, so that the real aggregates for consumption, investment, output, and the capital stock all grow at the same rate in the long run, is rejected by U.S. data. In addition, to model these aggregates as currently constructed in the U.S. National Accounts, a two-sector approach is required. Implications for empirical macroeconomics are explored. en
dc.format.extent 4304 bytes
dc.format.mimetype application/pdf
dc.language.iso en en
dc.publisher Federal Reserve en
dc.relation.ispartofseries Finance and Economics Discussion Series en
dc.relation.ispartofseries No. 01-04 en
dc.subject Balanced growth en
dc.subject Multisector models en
dc.subject Chain aggregation en
dc.subject.classification O41 en
dc.subject.classification O47 en
dc.subject.lcsh Economic development--United States en
dc.subject.lcsh Economic development--Mathematical models en
dc.subject.lcsh Durable goods, Consumer en
dc.title Balanced growth revisited : a two-sector model of economic growth en
dc.title.alternative A two-Sector approach to modeling U.S. NIPA data
dc.type Working Paper en
dc.internal.authorurl Karl Whelan (web page) en
dc.internal.authorurl en
dc.internal.authorcontactother Email:; Tel: 353 1 716 8239 en
dc.internal.authorid UCD0026 en
dc.internal.availability Full text available en
dc.internal.webversions en
dc.status Not peer reviewed en
dc.identifier.doi 10.2139/ssrn.258372
dc.neeo.contributor Whelan|Karl|aut|UCD0026

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