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A Generalized Uzawa Growth Theorem and Capital-Augmenting Technological Change

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Abstract

We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. The theorem implies that neoclassical growth models need at least three factors of production to be consistent with empirical evidence on both the capital-labor elasticity of substitution and the existence of capital-augmenting technical change. We also build and calibrate a three-factor endogenous growth model with directed technical change and show that it converges to a balanced growth path that is consistent with the empirical evidence. Our results indicate that natural resources and directed technical change play a central role in explaining balanced growth.

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  • Gregory Casey & Ryo Horii, 2019. "A Generalized Uzawa Growth Theorem and Capital-Augmenting Technological Change," Department of Economics Working Papers 2022-02, Department of Economics, Williams College, revised Jan 2022.
    • Handle: RePEc:wil:wileco:2022-02
    DOI: 10.36934/wecon:2022-02
    Note: An earlier version of this paper has been circulated under the title A Multi-factor Uzawa Growth Theorem and Endogenous Capital-Augmenting Technological Change.
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    Keywords

    Balanced Growth; Uzawa Steady State Growth Theorem; Endogenous Growth; Directed Technical Change;
    All these keywords.

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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