Reference : Steady-State Growth and the Elasticity of Substitution
Scientific journals : Article
Business & economic sciences : Macroeconomics & monetary economics
Steady-State Growth and the Elasticity of Substitution
Irmen, Andreas mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Journal of Economic Dynamics and Control
Elsevier Science
Yes (verified by ORBilu)
[en] Capital accumulation ; Elasticity of substitution ; Direction of technical change ; Neoclassical growth model
[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 a greater elasticity of substitution allows for faster 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.
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CREA, University of Luxembourg
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