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Technical change in a neoclassical two-sector model of optimal growth

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  • Mehdi Senouci

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper investigates into the consequences of sector-speci c technological progress in a two-sector, optimal growth model. In accordance with existing theory, we find that consumption-specifi c Hicks-neutral technical shocks increase consumption but leave other parameters unchanged. Hicks-neutral, investment-specifi c technical shocks increase the wage-rental ratio, and increase steady-state consumption by a factor equal to the macroeconomic ratio of capital share to labor share. If the elasticity of substitution is equal to one in the long run, the growth regime with only investment-specifi c technical change is sustainable and asymptotically balanced.

Suggested Citation

  • Mehdi Senouci, 2012. "Technical change in a neoclassical two-sector model of optimal growth," Working Papers halshs-00589627, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00589627
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00589627v2
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    References listed on IDEAS

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    Keywords

    Productivity; optimal growth; golden rule; two-sector models;
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