A Multisectoral Log-Linear Model of Economic Growth with Marshallian Externalities

This paper constructs a multisectoral general equilibrium growth model based on Marshallian externalities. Using homogenous accumulation and production functions, an analytical solution is derived. Making use of the theory of nonnegative matrices, I discuss the properties of the model and derive its time series implications. In particular, I give a characterization in terms of cointegrated time series which allows us to derive several empirically testable hypotheses about the long-run behavior of the model. Some of these hypotheses are investigated using U.S. manufacturing data