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Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s Technical Progress Function

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  • Schlicht, Ekkehart

Abstract

This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor’s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizsäcker (1966, 1966b). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.

Suggested Citation

  • Schlicht, Ekkehart, 2014. "Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s Technical Progress Function," Discussion Papers in Economics 18993, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenec:18993
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    References listed on IDEAS

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    1. Fischer, Stanley, 1972. "Keynes-Wicksell and Neoclassical Models of Money and Growth," American Economic Review, American Economic Association, vol. 62(5), pages 880-890, December.
    2. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 70(1), pages 65-94.
    3. R. M. Solow & J. Tobin & C. C. von Weizsäcker & M. Yaari, 1966. "Neoclassical Growth with Fixed Factor Proportions," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 79-115.
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    5. repec:lmu:muenbk:38821 is not listed on IDEAS
    6. H. Uzawa, 1961. "Neutral Inventions and the Stability of Growth Equilibrium," Review of Economic Studies, Oxford University Press, vol. 28(2), pages 117-124.
    7. Erkin Bairam, 1995. "Kaldor's technical progress function revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 2(9), pages 302-304.
    8. Kenneth J. Arrow, 1962. "The Economic Implications of Learning by Doing," Review of Economic Studies, Oxford University Press, vol. 29(3), pages 155-173.
    9. Charles I. Jones, 2005. "The Shape of Production Functions and the Direction of Technical Change," The Quarterly Journal of Economics, Oxford University Press, vol. 120(2), pages 517-549.
    10. Paul Hansen, 1996. "Kaldor's technical progress function: a comment," Applied Economics Letters, Taylor & Francis Journals, vol. 3(11), pages 729-731.
    11. Ekkehart Schlicht, 2006. "Public Debt As Private Wealth: Some Equilibrium Considerations," Metroeconomica, Wiley Blackwell, vol. 57(4), pages 494-520, November.
    12. Daron Acemoglu, 2003. "Labor- And Capital-Augmenting Technical Change," Journal of the European Economic Association, MIT Press, vol. 1(1), pages 1-37, March.
    13. William D. Nordhaus, 1973. "Some Skeptical Thoughts on the Theory of Induced Innovation," The Quarterly Journal of Economics, Oxford University Press, vol. 87(2), pages 208-219.
    14. H. S. Houthakker, 1955. "The Pareto Distribution and the Cobb-Douglas Production Function in Activity Analysis," Review of Economic Studies, Oxford University Press, vol. 23(1), pages 27-31.
    15. Schlicht, Ekkehart, . "Isolation and Aggregation in Economics," Monographs in Economics, University of Munich, Department of Economics, number 38821, November.
    16. Charles I. Jones & Dean Scrimgeour, 2008. "A New Proof of Uzawa's Steady-State Growth Theorem," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 180-182, February.
    17. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," Review of Economic Studies, Oxford University Press, vol. 32(3), pages 233-240.
    18. Andreas Irmen, 2013. "Adjustment costs in a variant of Uzawa's steady-state growth theorem," Economics Bulletin, AccessEcon, vol. 33(4), pages 2860-2873.
    19. Ekkehart Schlicht, 2006. "A Variant of Uzawa's Theorem," Economics Bulletin, AccessEcon, vol. 5(6), pages 1-5.
    20. Kennedy, Charles, 1973. "A Generalisation of the Theory of Induced Bias in Technical Progress," Economic Journal, Royal Economic Society, vol. 83(329), pages 48-57, March.
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    Cited by:

    1. Daniele Tavani & Luca Zamparelli, 2017. "Endogenous Technical Change In Alternative Theories Of Growth And Distribution," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1272-1303, December.

    More about this item

    Keywords

    directed technical change; directed technological change; bias in innovation; technical progress function; neoclassical production function; Harrod neutrality; Hicks neutrality; Cambridge theory of distribution; marginal productivity theory; Kaldor; Kennedy; von Weizsäcker; Solow model;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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