Two-sector Growth Models

  • Sibabrata Das
  • Alex Mourmouras
  • Peter C. RangazasEmail author
Part of the Springer Texts in Business and Economics book series (STBE)


This section provides an introduction to two-sector growth models. We begin with a model where a single good is produced using traditional means of production. In the traditional sector , production is carried out by households using land (natural resources) and labor. There are no firms or factories that rely on heavy plant and equipment and modern production methods to produce goods. This setting can be used to identify the conditions necessary for a modern sector to appear that would begin an “industrial revolution,” as in Hansen and Prescott (2002).


Capital Accumulation Physical Capital Relative Price Land Rent Closed Economy 
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Copyright information

© Springer International Publishing Switzerland 2015

Authors and Affiliations

  • Sibabrata Das
    • 1
  • Alex Mourmouras
    • 2
  • Peter C. Rangazas
    • 3
    Email author
  1. 1.International Monetary FundWashingtonUSA
  2. 2.Asia and Pacific DepartmentInternational Monetary FundWashingtonUSA
  3. 3.Indiana University-Purdue University Indianapolis (IUPUI)IndianapolisUSA

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