Capital-labor substitution and balanced growth

Debdulal Mallick

Journal of Macroeconomics, 2010, vol. 32, issue 4, 1131-1142

Abstract: This paper explores how different values of the elasticity of substitution between capital and labor ([sigma]) impact on the balanced growth paths and growth potential of a country in exogenous growth models. The behavior of the system depends on the value of [sigma] and the passage of [sigma] through two critical values causes a qualitative change in the nature of the singular points and of its trajectories. The balanced growth path defined by a singular point in the form of a saddle-path exists and is locally stable if [sigma] lies between two critical values.

Keywords: Elasticity; of; substitution; Economic; growth; Balanced; growth; path (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:32:y:2010:i:4:p:1131-1142

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