Growth with a Fixed Factor
Consider an economy in which a fi xed supply of unskilled labor can be combined with knowledge capital to produce consumption. The technology for accumulating knowledge capital is linear in knowledge capital. This leads to long-term growth if the production function for consumption goods is approximately Cobb-Douglas for large values of the stock of knowledge capital. The quality-ladder economy of Boldrin and Levine  generates a menu of Leontief technologies with this feature. If the initial capital stock is low, there can be a long period of stagnation before unskilled wages start to grow, as in Lewis . A small open economy with a sufficiently low initial capital stock will run a trade surplus during its initial stages of development.
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michele Boldrin & David K Levine, 2008.
"Quality Ladders, Competition and Endogenous Growth,"
2008 Meeting Papers
277, Society for Economic Dynamics.
- Michele Boldrin & David K Levine, 2010. "Quality Ladders, Competition and Endogenous Growth," Levine's Working Paper Archive 661465000000000028, David K. Levine.
- Larry E. Jones & Rodolfo Manuelli, 1990. "A Convex Model of Equilibrium Growth," NBER Working Papers 3241, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)