Reference : A Generalized Steady-State Growth Theorem
Scientific journals : Article
Business & economic sciences : Macroeconomics & monetary economics
A Generalized Steady-State Growth Theorem
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Macroeconomic Dynamics
Cambridge University Press
Yes (verified by ORBilu)
United Kingdom
[en] Steady-State Growth ; Capital Accumulation ; Uzawa’s Theorem
[en] Uzawa’s steady-state growth theorem (Uzawa (1961)) is generalized to a neoclassical economy that uses current output, e.g., to create technical progress or to manufacture intermediates. The difference between aggregate final-good production and these resources is referred to as net output. The new generalized steady-state growth theorem holds since net output exhibits constant returns to scale in capital and labor. This insight provides an understanding for why technical change is labor-augmenting in steady state even if capital-augmenting technical change is feasible. By example, this point is made for four growth mod-els that allow for endogenous capital- and labor-augmenting technical change, namely, Irmen and Tabakovic (2015), Acemoglu (2003), Acemoglu (2009), Chapter 15, and for the typical model of the induced innovations literature of the 1960s.The reduced form of these models is shown to be consistent with the generalizedsteady-state growth theorem.

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