The Long-run Implications of a Hicks-Neutral Technical Progress

Oded Galor

International Economic Review, 1988, vol. 29, issue 1, 177-83

Abstract: This paper analyzes the steady-state welfare implications of a Hicks-neutral technological progress, or alternatively, of an i nternational transfer of a Hicks-neutral superior technology within a n overlapping generations framework. The analysis indicates that prod ucers will be induced by profit motives to adopt the advanced technol ogy although its effect on factor prices and intertemporal consumptio n may reduce steady-state welfare. Morever, it is shown that in contr ast to the static results, a Hicks-neutral technical progress alters the long-run factor price ratio through the effect on capital formati on. Copyright 1988 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1988
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