A Note on the Imbalance Effect in the Uzawa-Lucas Model
The Uzawa-Lucas model is believed to yield a positive dependence of the output growth on the ratio of human capital to physical capital (an empirically plausible imbalance effect). We show that the imbalance effect become less plausible for a low physical capital share and a low elasticity of intertemporal substitution. In particular, the model is inconsistent with empirical observations for a relatively broad range of realistic parameter specifications.
Volume (Year): 4 (2007)
Issue (Month): 38 ()
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