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A two-sector approach to modeling U.S. NIPA data
Whelan, Karl
The one-sector Solow-Ramsey model is the most popular model of long-run economic growth. This paper argues that a two-sector approach, in which technological progress in the production of durable goods exceeds that in the rest of the economy, provides a far better picture of the long-run behavior of the U.S. economy. The paper shows how to use the two-sector approach to model the real chain-aggregated variables currently featured in the U.S. National Income and Product Accounts. It is shown that each of the major chain-aggregates-output, consumption, investment, and capital stock-will tend in the long run to grow at steady, but different, rates. Implications for empirical analysis based on these data are explored.
Keyword(s): Capital stock; Economic development; Economic models; Investments; Economic development--Mathematical models; Capital stock--United States; United States--Economic conditions
Publication Date:
2008
Type: Journal article
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): Blackwell Publishing on behalf of the Ohio State University
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:25:06 Last Updated: 2018-10-11 16:38:42