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Micro-foundation for a constant elasticity of substitution production function through mechanization

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  • Nakamura, Hideki

Abstract

We consider an increase in the range of capital use as a form of mechanization. A constant elasticity of substitution (CES) production function is dynamically derived from Leontief production functions through the endogenous complementary relationship between capital accumulation and mechanization. This implies that a CES production function can be resolved into technological change that does not involve changes in total factor productivity. Furthermore, using the normalizing procedure of the CES production function developed by de La Grandville [de La Grandville, O., 1989. In quest of the Slutsky diamond. American Economic Review 79, 468-481], we investigate how mechanization is related to the elasticity of substitution in our endogenous growth model.

Suggested Citation

  • Nakamura, Hideki, 2009. "Micro-foundation for a constant elasticity of substitution production function through mechanization," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 464-472, September.
  • Handle: RePEc:eee:jmacro:v:31:y:2009:i:3:p:464-472
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    References listed on IDEAS

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    Cited by:

    1. Growiec, Jakub, 2013. "Factor-augmenting technology choice and monopolistic competition," Journal of Macroeconomics, Elsevier, pages 86-94.
    2. Growiec, Jakub, 2013. "A microfoundation for normalized CES production functions with factor-augmenting technical change," Journal of Economic Dynamics and Control, Elsevier, pages 2336-2350.
    3. Temple, Jonathan, 2012. "The calibration of CES production functions," Journal of Macroeconomics, Elsevier, pages 294-303.

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