Is Harrod-neutrality Needed for Balanced Growth? Uzawa's Theorem Revisited
AbstractTaking into account the adjustment costs of investment, this paper proves that it is not the neoclassical growth model itself but the specific form of capital accumulation function that requires technical change to exclusively be Harrod neutral in steady state. Uzawa’s(1961)steady-state growth theorem holds only when the marginal efficiency of capital accumulation is constant, which implies that the capital supply is infinitely elastic. Therefore, it is unnecessary to make strong assumptions about the shape of the production function and the direction of technical change for neoclassical growth model to exhibit steady-state growth.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 55046.
Date of creation: 2014
Date of revision: Feb 2014
Neoclassical Growth Model; Uzawa’s Steady-state Growth Theorem; Direction of Technical Change; Adjustment Cost;
Find related papers by JEL classification:
- E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-11 (All new papers)
- NEP-FDG-2014-04-11 (Financial Development & Growth)
- NEP-GER-2014-04-11 (German Papers)
- NEP-GRO-2014-04-11 (Economic Growth)
- NEP-MAC-2014-04-11 (Macroeconomics)
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