Steady-state growth and the elasticity of substitution

Andreas Irmen

Journal of Economic Dynamics and Control, 2011, vol. 35, issue 8, 1215-1228

Abstract: In a neoclassical economy with endogenous capital- and labor-augmenting technical change the steady-state growth rate of output per worker is shown to increase in the elasticity of substitution between capital and labor. This confirms the assessment of Klump and de La Grandville (2000) that a greater elasticity of substitution allows for faster of economic growth. However, unlike their findings my result applies to the steady-state growth rate. Moreover, it does not hinge on particular assumptions on how aggregate savings come about. It holds for any household sector allowing savings to grow at the same rate as aggregate output.

Keywords: Capital; accumulation; Elasticity; of; substitution; Direction; of; technical; change; Neoclassical; growth; model (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (24)

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Related works:
Working Paper: Steady-state growth and the elasticity of substitution (2011)
Working Paper: Steady-State Growth and the Elasticity of Substitution (2010)
Working Paper: Steady-State Growth and the Elasticity of Substitution (2010)
Working Paper: Steady-State Growth and the Elasticity of Substitution (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:35:y:2011:i:8:p:1215-1228

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