[en] Steady-State Growth Theorem ; Adjustment Costs ; Capital Accumulation
[en] Uzawa's theorem (Uzawa (1961)) is extended to allow for adjustment costs in the process of capital accumulation. A new steady-state growth theorem with adjustment costs establishes that capital-augmenting technical change may arise in steady state. This is in sharp contrast to Uzawa's original finding. In a growing economy this possibility arises since diminishing returns in the production of capital cause a gap between the growth of gross capital investments and the growth of capital. In steady state, capital-augmenting technical change has the role to fill this gap. The discussion of the new theorem characterizes the conditions under which a steady-state path with capital-augmenting technical change exists.
[University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
