Saturday, March 15, 2014

Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s Technical Progress Function

This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor’s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizs├Ącker (1966). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.

The most recent draft is here: