Macroeconomics 12th Edition by Rudiger Dornbusch ,Stanley Fischer,Richard Startz

Exercise 10

Consider a two-sector model of growth, with two kinds of investment opportunities-one with a diminishing marginal product and one with a constant marginal product. ( Hint: See Figure 4-2.)
a. What does the production function for this problem look like
b. Characterize the set of equilibria for this model. Does output in any of the equilibria have nonzero per capita growth
c. What can this model help us explain that strict endogenous and neoclassical growth models cannot