Endogenous Capital-Augmenting Technological Change

Gregory Casey and Ryo Horii

ISER Discussion Paper from Institute of Social and Economic Research, Osaka University

Abstract: We construct a 3-factor, directed technical change growth model that exhibits capital-augmenting technical change on the balanced growth path (BGP), circumventing the issues usually caused by the 2-factor Uzawa growth theorem. We calibrate the model to the United States and consider a non-unitary elasticity of substitution between capital and labor. We show that the model converges to the BGP with capital-augmenting technical change from any initial condition. Our results indicate that natural resources and directed technical change play a central role in explaining balanced growth.

Date: 2023-11
New Economics Papers: this item is included in nep-gro
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Persistent link: https://EconPapers.repec.org/RePEc:dpr:wpaper:1220

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