A two-sector model of a closed static economy with labour market

The paper features a two-sector market model, where product markets clear immediately or generate a constant rate of utilization and where the labour markets, both sectoral and aggregate, clear in the long run. Impulse analyses are conducted in models of increasing complexity (two identical sectors, non-identical sectors, intermediate deliveries). The main result of the analyses is that, departing from homogeneity of capital and labour, aggregation of sectoral relations generates exactly the same outcome as does a macro model. Sectoral movements do not influence macroeconomic averages, so macro developments can be the result of different sectoral paths.