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Biased technological change and Kaldor’s stylized facts

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  • Kemp-Benedict, Eric

Abstract

This paper presents a theory of biased technological change in which firms pursue a random, local, search for productivity-enhancing innovations. They implement profitable innovations at fixed prices, subsequently adjusting prices and wages. Factor productivity growth rates are shown to respond positively to factor cost shares. Combined with price-setting behavior, an equilibrium is characterized by constant cost shares and productivity growth rates. Under target-return pricing, capital productivity growth is zero at equilibrium, yielding Kaldor’s “stylized facts” of constant capital productivity and rate of profit. Equilibrium can be disturbed by changes in the pricing regime or technological potential for productivity improvement.

Suggested Citation

  • Kemp-Benedict, Eric, 2017. "Biased technological change and Kaldor’s stylized facts," MPRA Paper 76803, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:76803
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    References listed on IDEAS

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    Cited by:

    1. Marwil J. Dávila-Fernández, 2018. "Alternative Approaches to Technological Change when Growth is BoPC," Department of Economics University of Siena 795, Department of Economics, University of Siena.
    2. Kemp-Benedict, Eric, 2018. "Dematerialization, Decoupling, and Productivity Change," Ecological Economics, Elsevier, vol. 150(C), pages 204-216.
    3. Eric Kemp-Benedict & Emily Ghosh, 2018. "Downshifting in the Fast Lane: A Post-Keynesian Model of a Consumer-Led Transition," Economies, MDPI, vol. 6(1), pages 1-17, January.

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    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E14 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Austrian; Evolutionary; Institutional
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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