A Note on Balanced Growth with a less than unitary Elasticity of Substitution
We present a simple production technology in which the choice of production technique results in a balanced growth path even in the presence of capital-augmenting technical progress. Given a particular choice of technique, the production function is CES with a less than unitary elasticity of factor substitution. The form of this production technology is also invariant to the choice of units, allowing us to abstract from the normalization considerations that often accompany the use of CES. The approach yields a balanced growth path but short-run time-varying factor shares without requiring an explicit model of the R&D sector.
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- León-Ledesma, Miguel A. & McAdam, Peter & Willman, Alpo, 2009.
"Identifying the elasticity of substitution with biased technical change,"
Working Paper Series
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DOCUMENTOS DE TRABAJO
002706, UNIVERSIDAD DEL ROSARIO.
- Hernando Zuleta, 2008. "Factor Saving Innovations and Factor Income Shares," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 836-851, October.
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