A Generalized Uzawa Growth Theorem

Gregory Casey and Ryo Horii

Journal of Political Economy Macroeconomics, 2024, vol. 2, issue 2, 336 - 373

Abstract: We prove a generalized, multifactor version of the Uzawa steady-state growth theorem. Balanced growth with capital-augmenting technical change is possible when capital has a unitary elasticity of substitution with at least one other factor of production. Thus, a neoclassical growth model with three or more factors of production can be consistent with empirical evidence on both the capital-labor elasticity of substitution and the declining price of investment relative to consumption. In a three-factor model calibrated to US data, medium-run fluctuations in the investment price explain labor share movements from 1960 to 2000, but not the subsequent fall in the labor share.

Date: 2024
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Working Paper: A Generalized Uzawa Growth Theorem (2023)
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