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Capital and Knowledge: Integrating Arrow’s Learning-by-Doing, the Walrasian Equilibrium Theory and Neoclassical Growth Theory

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  • Wei-Bin Zhang

    (Wei-Bin Zhang, Ritsumeikan Asia Pacific University, Jumonjibaru, Beppu-Shi, Oita-ken, 874-8577, Japan. E-mail: wbz1@apu.ac.jp)

Abstract

This article proposes a neoclassical growth model with endogenous capital accumulation and knowledge creation. The model integrates Arrow’s learning by doing, Uzawa’s two-sector growth model and Walrasian general equilibrium theory. We use a utility function, which determines leisure time, saving and consumption with utility optimization without leading to a higher dimensional dynamic system like the Ramsey approach. The dynamics of J -household economy is described by a (  J + 1)-dimensional differential equations system. We simulate the motion of the model and demonstrate transitional and long-term effects of changes in the propensity to save, the propensity to use leisure time, the population, the learning-by-doing efficiency and knowledge utilization efficiency. The comparative dynamic analysis provides some insights into issues related to inequality and growth. JEL Classification: D51, D31, O41, E13

Suggested Citation

  • Wei-Bin Zhang, 2014. "Capital and Knowledge: Integrating Arrow’s Learning-by-Doing, the Walrasian Equilibrium Theory and Neoclassical Growth Theory," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(2), pages 267-293, December.
    • Handle: RePEc:sae:smppub:v:3:y:2014:i:2:p:267-293
    DOI: 10.1177/2277978714548638
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    More about this item

    Keywords

    Walrasian general equilibrium theory; neoclassical growth theory; learning by doing; elastic labour supply; knowledge creation; capital accumulation;
    All these keywords.

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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