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Title:Steady-state growth and the elasticity of substitution PDF Logo
Authors:Irmen, Andreas
Issue Date:2010
Series/Report no.:CESifo working paper 2955
Abstract:In a neoclassical economy with endogenous capital- and labor-augmenting technical change the steady-state growth rate of output per worker is shown to increase in the elasticity of substitution between capital and labor. This confirms the assessment of Klump and de La Grandville (2000) that the elasticity of substitution is a powerful engine of economic growth. However, unlike their findings my result applies to the steady-state growth rate. Moreover, it does not hinge on particular assumptions on how aggregate savings come about. It holds for any household sector allowing savings to grow at the same rate as aggregate output.
Subjects:capital accumulation
elasticity of substitution
direction of technical change
neoclassical growth model
JEL:E22
O11
O33
O41
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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