Steady-state growth and the elasticity of substitution

Andreas Irmen

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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: E22; O11; O33; O41; Capital Accumulation; Elasticity of Substitution; Direction of Technical Change; Neoclassical Growth Model (search for similar items in EconPapers)
Date: 2011-06-01
Note: View the original document on HAL open archive server: https://hal.science/hal-00828979v1
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Citations: View citations in EconPapers (23)

Published in Journal of Economic Dynamics and Control, 2011, ⟨10.1016/j.jedc.2011.04.002⟩

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Related works:
Journal Article: 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:hal:journl:hal-00828979

DOI: 10.1016/j.jedc.2011.04.002

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