The Extended Three-Sector Model
Chapter 5 pointed out the importance of extending the basic three-sector model to accommodate (i) intermediate inputs of production, (ii) a stock of capital defined as a composite of various sector outputs, and (iii) government consumption and revenues. This chapter takes up the task of combining these extensions into a single model – the outcome of which is a model more suited to a broad array of policy analyses. Combining each of these features into a single model, however, has the cost of introducing a number of complications that make presenting and specifying the model more challenging.
KeywordsService Sector Capital Stock Industrial Sector Base Solution Intermediate Input
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