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Biased Technical Change and the Aggregate Production Function

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  • Thomas Michl
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    Abstract

    This paper offers a classical model of biased technical change in the MarxRicardo tradition as a framework for theoretical and applied studies of growth. The observable data it generates would appear to an unsuspecting economist to be well-described by a neoclassical model with a static Cobb-Douglas production function, when in fact this production function describes only the technological history of the economy. The CobbDouglas form results from the capital-using, labour-saving bias of technical change. The model's trajectory in wage-profit space will lie along the displaced image of the neoclassical factor price frontier, in contradiction to marginal productivity theory. The Solow residual can be reinterpreted by the classical theory as a measure of the size of this displacement.

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    File URL: http://www.tandfonline.com/doi/abs/10.1080/026921799101652
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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

    Volume (Year): 13 (1999)
    Issue (Month): 2 ()
    Pages: 193-206

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    Handle: RePEc:taf:irapec:v:13:y:1999:i:2:p:193-206

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    References

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    1. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
    2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345.
    3. Michl, Thomas R, 1991. "Wage-Profit Curves in U.S. Manufacturing," Cambridge Journal of Economics, Oxford University Press, vol. 15(3), pages 271-86, September.
    4. Paul M. Romer, 1987. "Crazy Explanations for the Productivity Slowdown," NBER Chapters, in: NBER Macroeconomics Annual 1987, Volume 2, pages 163-210 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Lee, Chien-Chiang & Chang, Chun-Ping, 2008. "Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data," Resource and Energy Economics, Elsevier, vol. 30(1), pages 50-65, January.
    2. Luca Zamparelli, 2009. "Direction and Intensity of Technical Change: a Micro Model," Working Papers 4, Doctoral School of Economics, Sapienza University of Rome.
    3. Anwar Shaikh, 2005. "Nonlinear Dynamics and Pseudo-Production Functions," Eastern Economic Journal, Eastern Economic Association, vol. 31(3), pages 447-466, Summer.
    4. Foley, Duncan K., 2003. "Endogenous technical change with externalities in a classical growth model," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 167-189, October.
    5. Daniele Tavani, 2013. "Bargaining over productivity and wages when technical change is induced: implications for growth, distribution, and employment," Journal of Economics, Springer, vol. 109(3), pages 207-244, July.
    6. zamparelli, luca, 2008. "Direction and intensity of technical change: a micro-founded growth model," MPRA Paper 10843, University Library of Munich, Germany.

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