Growth with a Fixed Factor
AbstractConsider an economy in which a fi xed supply of unskilled labor can be combined with knowledge capital to produce consumption. The technology for accumulating knowledge capital is linear in knowledge capital. This leads to long-term growth if the production function for consumption goods is approximately Cobb-Douglas for large values of the stock of knowledge capital. The quality-ladder economy of Boldrin and Levine  generates a menu of Leontief technologies with this feature. If the initial capital stock is low, there can be a long period of stagnation before unskilled wages start to grow, as in Lewis . A small open economy with a sufficiently low initial capital stock will run a trade surplus during its initial stages of development.
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Bibliographic InfoPaper provided by University of Minnesota, Department of Economics in its series Working Papers with number 2012-1.
Length: 36 pages
Date of creation: 01 Jan 2012
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More information through EDIRC
economic growth; aggregate productivity;
Find related papers by JEL classification:
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-10 (All new papers)
- NEP-DEV-2012-01-10 (Development)
- NEP-DGE-2012-01-10 (Dynamic General Equilibrium)
- NEP-FDG-2012-01-10 (Financial Development & Growth)
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- Larry E. Jones & Rodolfo Manuelli, 1990. "A Convex Model of Equilibrium Growth," NBER Working Papers 3241, National Bureau of Economic Research, Inc.
- Ezra Oberfield & Devesh Raval, 2012. "Micro data and macro technology," Working Paper Series WP-2012-11, Federal Reserve Bank of Chicago.
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