Consider a two-sector model of growth, with two kinds of investment opportunities one with a diminishing marginal product and one with a constant marginal product. A. Characterize the set of equilibria for this model. Does output in any of the equilibria have nonzero per capita- growth? B. What can this model help us explain that strict endogenous and neo-classical growth models cannot?

Consider a two-sector model of growth, with two kinds of investment opportunities one with a diminishing marginal product and one with a constant marginal product. A. Characterize the set of equilibria for this model. Does output in any of the equilibria have nonzero per capita- growth? B. What can this model help us explain that strict endogenous and neo-classical growth models cannot?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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Consider a two-sector model of growth, with two kinds of investment opportunities—one with a diminishing marginal product and one with a constant marginal product. a. What does the production function for this problem look like? b. Characterize the set of equilibria for this model. Does output in any of the equilibria have nonzero per capita growth? c. What can this model help us explain that strict endogenous and neoclassical growth models cannot?
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