Steady-State Growth and the Elasticity of Substitution

Reference : Steady-State Growth and the Elasticity of Substitution


	Document type :	Reports : External report
	Discipline(s) :	Business & economic sciences : Macroeconomics & monetary economics
	To cite this reference:	http://hdl.handle.net/10993/12085

Title :	Steady-State Growth and the Elasticity of Substitution
Language :	English
Author, co-author :	Irmen, Andreas [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Publication date :	2010
Publisher :	CESifo Group Munich
Report number :	2955
Keywords :	[en] capital accumulation; elasticity of substitution; direction of technical change; neoclassical growth
Abstract :	[en] In a neoclassical economy with endogenous capital- and labor-augmenting technical change the steady-state growth rate of output per worker is shown to increase in the elasticity of substitution between capital and labor. This confirms the assessment of Klump and de La Grandville (2000) that the elasticity of substitution is a powerful engine of economic growth. However, unlike their findings my result applies to the steady-state growth rate. Moreover, it does not hinge on particular assumptions on how aggregate savings come about. It holds for any household sector allowing savings to grow at the same rate as aggregate output.
Target :	Researchers ; Students
Permalink :	http://hdl.handle.net/10993/12085
Other URL :	http://ideas.repec.org/p/ces/ceswps/_2955.html
Commentary :	CESifo Working Paper Series

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