Integrated Analysis of Economic Growth and Land Prices: A Two-Sector Model Approach

Abstract

The study presents a comprehensive analysis by constructing a two-sector growth model that incorporates endogenous wealth accumulation and land price within the framework of neoclassical growth theory and Ricardian theory. The economy under consideration comprises industrial and agricultural sectors, reflecting the dual nature of economic activity. By leveraging insights from both theories, the research aims to conduct a comparative dynamic analysis to understand the implications of changes in preferences and output elasticities of capital across the two sectors. One of the key findings of the study is the close relationship between economic growth and land prices. Through rigorous theoretical analysis and comparative dynamics, the research demonstrates that fluctuations in land prices are closely linked to the overall trajectory of economic growth. This empirical observation, often mentioned in previous studies, is elucidated within the integrated framework of neoclassical growth theory and Ricardian theory, providing a deeper understanding of the underlying mechanisms driving economic expansion. By integrating insights from neoclassical growth theory and Ricardian theory, the study offers a holistic perspective on the dynamics of economic growth and land prices. This integrated approach not only enhances our theoretical understanding but also provides valuable insights for policymakers and practitioners seeking to navigate the complex interactions between economic activity, wealth accumulation, and land markets. Overall, the research contributes to advancing our knowledge of economic growth dynamics and underscores the importance of considering multifaceted theoretical frameworks in analyzing real-world phenomena.