JOURNAL OF POLITICAL ECONOMY These transitional effects of economic policy cannot have a large im pact on the rate of growth, given that the rough constancy of the eal interest rate during the last century suggests that transitional dynamics play a modest role in the growth process(King and Rebelo 1989) This paper is organized as follows. Section II studies a two-sector extension of a linear growth model that incorporates nonreproduc ible factors in the production process. This model is used to study he effects of taxation and the influence of the rate of savings on the rate Section III expands this model to distinguish the role of physical apical and human capital along the lines suggested by Lucas (1988 This extended model shows that the feasibility of sustained growth does not require capital to be produced with a linear technology, as might be suggested by Section II and by the models discussed by Uzawa(1965) and Lucas (1988). All that is required to assure the feasibility of perpetual growth is the existence of a"core"of capital goods that is produced with constant returns technologies and with out the direct or indirect use of nonreproducible factors Treating separately the accumulation of physical and human capi tal introduces transitional dynamics that are absent in Section IL. Br the implications obtained for the effects of taxes and of the savings rate along the steady-state path are basically those of Section II, in he case of both exogenous and endogenous leisure choice The remainder of Section III is devoted to generalizing the model of Section II along two different directions. First, capital goods pro- duced with nonreproducible factors are introduced in the economy Second, the consequences of introducing multiple consumptio oods are examined. the main policy implications derived in Section Ii prove to be robust to these generalizations Section iv relates the models discussed here to the neoclassical model and to some of the recent growth literature. Section V provides some conclusions and outlines directions for future research II. A Basic Endogenous Growth Model The point of departure in this paper will be an economy in which there are two types of factors of production: reproducible, which can be accumulated over time(e.g, physical and human capital), and nonreproducible, which are available in the same quantity in ever (e. g, land). The quantity of all rep factors will be summarized by che capital good Ze, which can be viewed as a compos ite of various types of physical and human capital. Similarly, the fixed amount available of nonreproducible factors will be summarized by he composite good T