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A Generalized Uzawa Growth Theorem and Capital-Augmenting Technological Change

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  • Gregory Casey
  • Ryo Horii

Abstract

We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. The theorem implies that neoclassical growth models need at least three factors of production to be consistent with empirical evidence on both the capital-labor elasticity of substitution and the existence of capital-augmenting technical change. We also build and calibrate a three-factor endogenous growth model with directed technical change and show that it converges to a balanced growth path that is consistent with the empirical evidence. Our results indicate that natural resources including land and directed technical change play a central role in explaining balanced growth.

Suggested Citation

  • Gregory Casey & Ryo Horii, 2022. "A Generalized Uzawa Growth Theorem and Capital-Augmenting Technological Change," ISER Discussion Paper 1157, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1157
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    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2022/DP1157.pdf
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    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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