Balanced growth despite uzawa

Gene M. Grossman, Elhanan Helpman, Ezra Oberfield, Thomas Sampson

Research output: Contribution to journalArticle

14 Scopus citations

Abstract

The evidence for the United States points to balanced growth despite falling investment-good prices and a less-than-unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth Theorem. We extend Uzawa's theorem to show that the introduction of human capital accumulation in the standard way does not resolve the puzzle. However, balanced growth is possible if education is endogenous and capital is more complementary with schooling than with raw labor. We present a class of aggregate production functions for which a neoclassical growth model with capital-augmenting technological progress and endogenous schooling converges to a balanced growth path.

Original languageEnglish (US)
Pages (from-to)1293-1312
Number of pages20
JournalAmerican Economic Review
Volume107
Issue number4
DOIs
StatePublished - Apr 2017
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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    Grossman, G. M., Helpman, E., Oberfield, E., & Sampson, T. (2017). Balanced growth despite uzawa. American Economic Review, 107(4), 1293-1312. https://doi.org/10.1257/aer.20151739