The two sector endogenous growth model: An atlas

► I extend the Lucas (1988) two-sector endogenous growth model. ► I derive necessary and sufficient conditions for balanced growth and local saddle-path stability. ► Introduce external effects and depreciation in the human capital sector. ► With such externalities model consistent with high intertemporal elasticities of substitution. ► The model with high intertemporal rates of substitution is consistent with cross-country data.