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Factor-eliminating technical change

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  • Peretto, Pietro F.
  • Seater, John J.

Abstract

Perpetual growth requires offsetting diminishing returns to reproducible factors of production. In this article we present a theory of factor elimination. For simplicity and clarity, there is no augmentation of non-reproducible factors, thus excluding the standard engine of growth. By spending resources on R&D, agents learn to change the exponents of a Cobb–Douglas production function. We obtain the economy's balanced growth path and complete transition dynamics. The theory provides a mechanism for the transition from an initial technology incapable of supporting perpetual growth to one with constant returns to reproducible factors that supports it.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 60 (2013)
Issue (Month): 4 ()
Pages: 459-473

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Handle: RePEc:eee:moneco:v:60:y:2013:i:4:p:459-473

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Web page: http://www.elsevier.com/locate/inca/505566

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  8. Alan B. Krueger, 1999. "Measuring Labor's Share," American Economic Review, American Economic Association, vol. 89(2), pages 45-51, May.
  9. Peretto, Pietro F, 1998. " Technological Change and Population Growth," Journal of Economic Growth, Springer, vol. 3(4), pages 283-311, December.
  10. Hernando Zuleta, 2007. "An empirical note on factor shares," DOCUMENTOS DE TRABAJO 004363, UNIVERSIDAD DEL ROSARIO.
  11. Blanchard, Olivier, 1998. "Revisiting European Unemployment : Unemployment, Capital Accumulation and Factor Prices," Research Series, Economic and Social Research Institute (ESRI), number GL28, September.
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  13. Douglas Gollin, 2001. "Getting Income Shares Right," Department of Economics Working Papers 2001-11, Department of Economics, Williams College.
  14. John Bound & George Johnson, 1995. "What are the causes of rising wage inequality in the United States?," Economic Policy Review, Federal Reserve Bank of New York, issue Jan, pages 9-17.
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  17. Peretto, Pietro F., 1999. "Cost reduction, entry, and the interdependence of market structure and economic growth," Journal of Monetary Economics, Elsevier, vol. 43(1), pages 173-195, February.
  18. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
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Cited by:
  1. Julián David Parada, 2008. "Tasa de depreciación endógena y crecimiento económico," DOCUMENTOS DE TRABAJO 004594, UNIVERSIDAD DEL ROSARIO.
  2. Alberto Dalmazzo & Antonio Accetturo & Guido de Blasio, 2011. "Skill-Biased Share-Altering Technical Change in Spatial General Equilibrium," ERSA conference papers ersa11p83, European Regional Science Association.
  3. Laura Liliana Moreno Herrera & Jorge Eduardo Pérez Pérez, 2009. "Biased Technological Change, Impatience and Welfare," DEGIT Conference Papers c014_046, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Madsen, Jakob & Ang, James & Banerjee, Rajabrata, 2010. "Four Centuries of British Economic Growth: The Roles of Technology and Population," MPRA Paper 23510, University Library of Munich, Germany.
  5. Brad Sturgill, 2010. "Cross-country Variation in Factor Shares and its Implications for Development Accounting," 2010 Meeting Papers 152, Society for Economic Dynamics.
  6. Nazrullaeva, Eugenia, 2010. "Modeling the relationship between investment processes and costs structure applied to Russian economic activities in 2005-2009," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 19(3), pages 38-61.

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