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Capital-labor substitution and balanced growth

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  • Mallick, Debdulal

Abstract

This paper explores how different values of the elasticity of substitution between capital and labor ([sigma]) impact on the balanced growth paths and growth potential of a country in exogenous growth models. The behavior of the system depends on the value of [sigma] and the passage of [sigma] through two critical values causes a qualitative change in the nature of the singular points and of its trajectories. The balanced growth path defined by a singular point in the form of a saddle-path exists and is locally stable if [sigma] lies between two critical values.

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  • Mallick, Debdulal, 2010. "Capital-labor substitution and balanced growth," Journal of Macroeconomics, Elsevier, vol. 32(4), pages 1131-1142, December.
    • Handle: RePEc:eee:jmacro:v:32:y:2010:i:4:p:1131-1142
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    Cited by:

    1. Debdulal Mallick, 2012. "The role of capital‐labour substitution in economic growth," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 5(1), pages 89-101, April.
    2. Rainer Klump & Peter McAdam & Alpo Willman, 2012. "The Normalized Ces Production Function: Theory And Empirics," Journal of Economic Surveys, Wiley Blackwell, vol. 26(5), pages 769-799, December.
    3. Kemnitz, Alexander & Knoblach, Michael, 2020. "Endogenous sigma-augmenting technological change: An R&D-based approach," CEPIE Working Papers 02/20, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    4. Sueyoshi, Toshiyuki & Yuan, Yan, 2016. "Marginal Rate of Transformation and Rate of Substitution measured by DEA environmental assessment: Comparison among European and North American nations," Energy Economics, Elsevier, vol. 56(C), pages 270-287.
    5. I.N. Sycheva & E.M. Akhmetshin & A.N. Dunets & I.A. Svistula & T.A. Panteleeva & I.Yu. Potashova, 2018. "Labour Relations in Research of Socio-economic Systems," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 356-367.
    6. repec:ers:journl:v:volumexxi:y:2018:i:issue4:p:356-367 is not listed on IDEAS
    7. Mallick, Debdulal & Maqsood, Nabeel, 2022. "Capital-labor substitution and misallocation," MPRA Paper 115090, University Library of Munich, Germany.

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