Testing models of growth - a two-sector model of the USA

The paper makes two contributions to the literature on economic growth. Firstly, a two-sector growth model is extended to consider m -types of capital. Conditions are identified which aid classification of models as either exogenous or endogenous. Secondly, a preliminary empirical application based upon US annual data 1959-1990 finds in favour of 'observational equivalence' of exogenous and endogenous explanations of growth, whereas a 'second-round' of testing suggests weak evidence in favour of an exogenous explanation of growth.