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The Fundamental Duality Theorem of Balanced Growth

Author

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  • Ian King
  • Don Ferguson

Abstract

In this paper we demonstrate that a simple duality relation underlies balanced growth models with non-joint production. Included in this class of models is the standard neoclassical growth model and endogenous growth models that admit balanced growth paths. In all of these models, the optimal transformation frontier and the factor price frontier take precisely the same mathematical formulation. Studying these identical frontiers in the context of the different models provides new insights into the relative structures of these models, the role of savings, and the nature of dynamic efficiency in each.

Suggested Citation

  • Ian King & Don Ferguson, 2007. "The Fundamental Duality Theorem of Balanced Growth," Department of Economics - Working Papers Series 1016, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:1016
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    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0009/802863/1016.pdf
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    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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