A two-sector model of optimal growth in which labour is employed only in the industry of investment goods: A complete characterization of equilibrium paths

Marco Guerrazzi

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, I develop a two-sector growth model with endogenous labour supply in which labour is employed only in the production of investment goods. From a theoretical point of view, I show that no matter the shape of the technology to produce consumption goods, a convex technology in the sector of investment goods is necessary and sufficient for a meaningful stationary solution and the determinacy of equilibrium trajectories. In addition, from a numerical perspective, I show that a calibrated version of the model relaxes the complementarity between the propensity to consume and to save and it is also able to provide a rationale for the procyclical patterns of the relative price of capital goods and the real wage.

Keywords: Capital accumulation; Investment; Consumption; Two-sector growth model, Relative price of capital goods, Real wage. (search for similar items in EconPapers)
JEL-codes: C61 E21 E22 O11 (search for similar items in EconPapers)
Date: 2025-09-28
New Economics Papers: this item is included in nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/126299/1/MPRA_paper_126299.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:126299

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().