Long‐period Positions in Multi‐sectoral Cobb–Douglas Economies

The present paper considers a constant returns to scale non‐joint production economy with one primary factor (labour). It follows from the non‐substitution theorem that macroeconomic variables are completely determined by the wage–profit distribution in a long‐period position. We investigate the special case in which production in each sector as well as consumption are characterized by means of Cobb–Douglas functions. Despite the non‐linearity, this parametrization allows us to compute sectoral and macroeconomic variables in simple and intuitive equations. As noted in earlier literature, many variables behave differently than would be expected on basis of a one‐sectoral Solow growth model.