A two-sector approach to modeling U.S. NIPA data

Karl Whelan ()

Open Access publications from School of Economics, University College Dublin

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, 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.

Keywords: Capital stock; Economic development; Economic models; Investments; Economic development--Mathematical models; Capital stock--United States; United States--Economic conditions (search for similar items in EconPapers)
Pages: 30 pages
Date: 2003-08
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Citations: View citations in EconPapers (93)

Published in: Journal of Money, Credit and Banking, 35(4) 2003-08

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http://hdl.handle.net/10197/203 Open Access version, 2003 (application/pdf)

Related works:
Journal Article: A Two-Sector Approach to Modeling U.S. NIPA Data (2003)
Working Paper: A two-sector approach to modeling U.S. NIPA data (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/203

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