A Two-Sector Approach to Modeling U.S. NIPA Data

By Karl Whelan. 2001

153 citations recorded by the source corpus.

The one-sector Solow–Ramsey model is the most popular model of longrun 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 longrun behavior of the U.S. economy. The paper shows how to use the twosector 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.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/13ec7e17e1109c920bc9d1a3155548c9bf0d336e

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In Economics and Econometrics

Citations in the corpus

Natural rate measures in an estimated DSGE model of the U.S. economy (2008, unknown): “4 See, for example, Greenwood et al. (1997, 2000), Whelan (2003) , and Fisher (2006).”
Tracking the Slowdown in Long-Run GDP Growth (2017, methodology): “Whelan, 2003), we construct a Fisher index of non-durables and services and use its growth rate as an observable variable in the panel. It can be verified that the ratio of consumption defined in this manner to real GDP displays no trend in the data, unlike the trend observed in the ratio of overall”
Housing Market Spillovers: Evidence from an Estimated DSGE Model (2010, unknown): “We use total chain-weighted consumption, since our goal is to assess the implications of housing for a broad measure of consumption, and because chained aggregates do not su¤er the base-year problem discussed in Whelan (2003).”
A Guide To U.S. Chain Aggregated Nipa Data (2002, methodology): “Whelan (2002a) develops a two-sector general equilibrium model of this type, and shows how it can be fitted to U.”
The Facts of Economic Growth (2015, background): “Young (1992) and Young (1995) document the surprisingly slow total factor productivity growth in the East Asian miracle countries. Krugman (1994) puts Young’s accounting in context and relates it to the surprising finding of early growth accounting exercises that the Soviet Union exhibited slow TFP ”