Homothetic Multisector Growth Models

Bjarne S. Jensen and Ulla Lehmijoki

DEGIT Conference Papers from DEGIT, Dynamics, Economic Growth, and International Trade

Abstract: Multi-sector growth (MSG) models have a special aura which is shared with Computable general equilibrium (CGE) models. Both of them, with their many sectors (industries, goods), are known as trying to convert Walrasian general equilibrium systems from an abstract economy representation into workable models with industrial structures changing as actually observed. Yet they are plagued by severe problems. First, they are difficult subjects involving systems of nonlinear equations. Second, their prevalent numerical (algorithmic) methodology offers little in the way of showing a clear overall picture and understanding the plethora of numbers pouring out from model simulations. The great wood is not seen for all the trees. Hence the main objective is to set out comparative-static and dynamic systems for succinctly stating and explicitly solving multisector growth models. The Walrasian general equilibrium is completely stated by one equation and the multisector dynamics by one differential equation. Benchmark solutions are shown for three CES parameter regimes of a ten-sector general equilibrium model.

Pages: 38 pages
Date: 2011-09
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Citations: View citations in EconPapers (7)

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