Micro-foundation for a constant elasticity of substitution production function through mechanization

Hideki Nakamura

Journal of Macroeconomics, 2009, vol. 31, issue 3, pages 464-472

Abstract: We consider an increase in the range of capital use as a form of mechanization. A constant elasticity of substitution (CES) production function is dynamically derived from Leontief production functions through the endogenous complementary relationship between capital accumulation and mechanization. This implies that a CES production function can be resolved into technological change that does not involve changes in total factor productivity. Furthermore, using the normalizing procedure of the CES production function developed by de La Grandville [de La Grandville, O., 1989. In quest of the Slutsky diamond. American Economic Review 79, 468-481], we investigate how mechanization is related to the elasticity of substitution in our endogenous growth model.

Keywords: Mechanization; Dynamic; changes; in; production; functions; Micro-foundation; for; a; CES; production; function; Total; factor; productivity (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:jmacro:v:31:y:2009:i:3:p:464-472

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