Revisting the Steady-State Equilibrium Conditions of Neoclassical Growth Models

Defu Li (), Jiuli Huang and Ying Zhou

MPRA Paper from University Library of Munich, Germany

Abstract: Since the publication of Uzawa(1961), it has been widely accepted that technical change must be purely labor-augmenting for a growth model to exhibit steady-state path. But in this paper, we argue that such a constraint is unnecessary. Further, our model shows that, as long as the sum of the growth rate of marginal efficiency of capital accumulation and the rate of capital-augmenting technological progress equals zero, steady-state growth can be established without constraining the direction of technological change. Thus Uzawa’s theorem represents only a special case, and the explanatory power of growth models would be greatly enhanced if such a constraint is removed.

Keywords: Neoclassical Growth Model; Uzawa’s Steady-state Growth Theorem; Direction of Technical Change; Adjustment Cost (search for similar items in EconPapers)
JEL-codes: E13 O33 O41 (search for similar items in EconPapers)
Date: 2013-05, Revised 2013-05
New Economics Papers: this item is included in nep-ger, nep-gro and nep-mac
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