Capital Deepening and Non-Balanced Economic GrowthDaron Acemoglu and Veronica Guerrieri No 207, 2006 Meeting Papers from Society for Economic Dynamics Abstract: This paper constructs a model of non-balanced economic growth. The main economic force is the combination of differences in factor proportions and capital deepening. Capital deepening tends to increase the relative output of the sector with a greater capital share (despite the equilibrium reallocation of capital and labor away from that sector). We first illustrate this force using a general two-sector model. We then investigate it further using a class of models with constant elasticity of substitution between two sectors and Cobb- Douglas production functions in each sector. In this class of models, non-balanced growth is shown to be consistent with an asymptotic equilibrium with constant interest rate and capital share in national income. Finally, we construct and analyze a model of “nonbalanced endogenous growth,†which extends these results to an economy with endogenous and directed technical change, and demonstrates that non-balanced technological progress can be an equilibrium phenomenon Keywords: capital deepening; endogenous growth; multi-sector growth; non-balanced (search for similar items in EconPapers) Downloads: (external link) Related works: Access Statistics for this paper More papers in 2006 Meeting Papers from Society for Economic Dynamics |
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