In a two-sector endogenous growth model with learning by doing and intersectoral knowledge spillovers, we associate local
dynamics with the slope of the excess demand curve for a consumption good. Factor intensity determines the income effect,
which governs dynamics.
Keywords Two-sector endogenous growth model - Intersectoral knowledge spillovers - Excess demand curve - Factor intensity - Income effect
JEL Classification Number O41
We are grateful to an anonymous referee for his/her helpful comments and suggestions.