Comment on Acemoglu “Labor- and Capital-augmenting technical change”

Defu Li, Benjamin Bental and Xuemei Tang

MPRA Paper from University Library of Munich, Germany

Abstract: Acemoglu’s (2003) paper “Labor- and Capital-augmenting Technical Change” is a pioneering work that introduces a growth model with an endogenous direction of technical progress including microfoundations. At the steady-state equilibrium, the model indicates that there is only net labor-augmenting technical change, despite firms being able to pursue both labor- and capital-augmenting technological improvements. While this paper is a classic and original contribution to the field, it presents several significant shortcomings: (1) substantial mathematical errors in the proof of the main propositions; (2) the absence of a dynamic adjustment function for scientists across different innovation sectors, which is critical for the model; (3) neglect of the crucial condition required for the propositions to hold; (4) omission of important policy implications that diverge from existing literature; and (5) insufficient explanation of the intuition behind the model’s core conclusions. This comment identifies and addresses these shortcomings.

Keywords: Acemoglu， Endogenous technical change， Direction of technical change， Balanced Growth Path; Relative income share of factors， Dynamic system (search for similar items in EconPapers)
JEL-codes: E25 O14 O31 O33 (search for similar items in EconPapers)
Date: 2024-12-18
New Economics Papers: this item is included in nep-gro
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