overtaking criterion, golden-rule stock, value-loss lines, D90, C62, O21,

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We present results on undiscounted optimal policies in the Leontief two-sector growth model with durable capital. Unlike the results with a labour intensive consumption goods sector, we show that a monotonic optimal programme is only one special case out of many richer possibilities of transition dynamics. Depending on the initial capital stock, and a key parameter z that could be interpreted as a marginal rate of transformation of capital between today and tomorrow, an optimal programme may converge to a periodtwo cycle; and even when it converges to the golden rule stock, it can do so (damped) cyclically or with a "jump".j ere_461 490..511 JEL Classification Numbers: D90, C62, O21.

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