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Endogenous Capital Augmenting Technical Change And The Shape Of Aggregate Production Function
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Book Synopsis Endogenous Capital Augmenting Technical Change and the Shape of Aggregate Production Function by : Pengfei Zhang
Download or read book Endogenous Capital Augmenting Technical Change and the Shape of Aggregate Production Function written by Pengfei Zhang and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a neoclassical growth model with a constant elasticity of substitution production function, the conventional wisdom claims that capital augmenting technical change is labor biased and ceteris paribus increases the labor share when capital and labor are gross compliments. We construct an endogenous biased technical change model to challenge that interpretation. We show that capital augmenting technical change is capital biased and ceteris paribus decreases the labor share irrespective of the size of the elasticity of substitution. And we also provide a microfoundation for the induced aggregate production function to take the form of AK in the long-run.
Book Synopsis The Aggregate Production Function and the Measurement of Technical Change by : Jesus Felipe
Download or read book The Aggregate Production Function and the Measurement of Technical Change written by Jesus Felipe and published by Edward Elgar Pub. This book was released on 2013 with total page 388 pages. Available in PDF, EPUB and Kindle. Book excerpt: This is an extremely important and long-awaited book. The authors provide a cogent guide to all that is wrong with the theory and empirical applications of the discredited notion of an aggregate production function. Their critique has devastating implications for orthodox macroeconomics. Anwar Shaikh, New School for Social Research, US There are none so blind as those who will not see. For decades now John McCombie and Jesus Felipe have been publishing papers which draw out the implications of the conceptual vacuousness that characterises fitting aggregate production function specifications to data to test the validity of the marginal productivity theory of distribution, a critique first developed by Henry Phelps Brown and Herbert Simon. By careful empirical and theoretical work, they have reached the conclusion that the huge literature on aggregate production functions and technical progress is not even wrong because predictions cannot be tested, that they are only variations on manipulations of national accounting identities. Perhaps this time it really will be different, the scales will fall from the professions eyes. I certainly hope so. G.C. Harcourt, Jesus College, Cambridge, UK and University of New South Wales, Australia This is a very important book. Proofs that aggregate production functions do not exist have been around for more than 50 years. This casts doubt not only on macroeconomic theory but also on empirical work and policy. Yet, this has not deterred macro-economists. The authors show in great detail that the apparent fit of such functions to value-based data is a tautology and not a proof that such aggregates exist. One hopes that the profession will finally take note. Franklin M. Fisher, Massachusetts Institute of Technology, US Felipe and McCombie have gathered all of the compelling arguments denying the existence of aggregate production functions and showing that econometric estimates based on these fail to measure what they purport to quantify: they are artefacts. Their critique, which ought to be read by any economist doing empirical work, is destructive of nearly all that is important to mainstream economics: NAIRU and potential output measures, measures of wage elasticities, of output elasticities and of total factor productivity growth. Marc Lavoie, University of Ottawa, Canada This authoritative and stimulating book represents a fundamental critique of the aggregate production function, a concept widely used in macroeconomics. The authors explain why, despite the serious aggregation problems that surround it, aggregate production functions often give plausible statistical results. This is due to the use of constant-price value data, rather than the theoretically correct physical data, together with an underlying accounting identity that relates the data definitionally. It is in this sense that the aggregate production function is not even wrong: it is not a behavioural relationship capable of being statistically refuted. The book examines the history of the production function and shows how certain seminal works on neoclassical growth theory, labour demand functions and estimates of the mark-up, among others, suffer from this fundamental problem. The book represents a fundamental critique of the aggregate production function and will be of interest to all macroeconomists.
Book Synopsis Endogenous Sigma-augmenting Technological Change by : Alexander Kemnitz
Download or read book Endogenous Sigma-augmenting Technological Change written by Alexander Kemnitz and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: There is now increasing evidence that for the U.S. economy, the elasticity of substitution between capital and labor, "sigma", is rising over time. To account for this, we propose a microfounded model, where the evolution of "sigma", and, hence, the shape of the aggregate production function occur endogenously. We develop a Schumpeterian growth model in which firms can undertake R&D activities that stochastically lead to the discovery of production technologies characterized by a higher elasticity of substitution between capital and labor. Improved possibilities for factor substitution mitigate the diminishment of the marginal product of capital and spur capital accumulation. Due to successful innovations, the steady state of the economy entails higher levels of the capital stock and the output good. Moreover, our numerical simulations show that the timing of innovations is important: two economies with the same steady-state elasticity of substitution between capital and labor can differ in terms of their steady-state levels of the capital stock and the output good.
Book Synopsis Growth and Distribution by : Duncan K. Foley
Download or read book Growth and Distribution written by Duncan K. Foley and published by . This book was released on 2019-02 with total page 417 pages. Available in PDF, EPUB and Kindle. Book excerpt: Authors Foley, Michl, and Tavani offer a major revision of an established textbook on the theory, measurement, and history of economic growth, with new material on climate change, corporate capitalism, and innovation.
Book Synopsis Capital Accumulation, Technical Progress and Economic Growth by : Chong-il Kim
Download or read book Capital Accumulation, Technical Progress and Economic Growth written by Chong-il Kim and published by . This book was released on 1992 with total page 250 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Endogenous Innovation in the Theory of Growth by : Gene M. Grossman
Download or read book Endogenous Innovation in the Theory of Growth written by Gene M. Grossman and published by . This book was released on 1993 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper makes the case that purposive, profit-seeking investments in knowledge play a critical role in the long-run growth process. First, we review the implications of neoclassical growth theory and the more recent theories of 'endogenous growth'. Then we discuss the empirical evidence that bears on the modeling of long-run growth. Finally, we describe in more detail a model of growth based on endogenous technological progress and discuss the lessons that such models can teach us.
Book Synopsis New Developments in Productivity Analysis by : Charles R. Hulten
Download or read book New Developments in Productivity Analysis written by Charles R. Hulten and published by University of Chicago Press. This book was released on 2007-11-01 with total page 648 pages. Available in PDF, EPUB and Kindle. Book excerpt: The productivity slowdown of the 1970s and 1980s and the resumption of productivity growth in the 1990s have provoked controversy among policymakers and researchers. Economists have been forced to reexamine fundamental questions of measurement technique. Some researchers argue that econometric approaches to productivity measurement usefully address shortcomings of the dominant index number techniques while others maintain that current productivity statistics underreport damage to the environment. In this book, the contributors propose innovative approaches to these issues. The result is a state-of-the-art exposition of contemporary productivity analysis. Charles R. Hulten is professor of economics at the University of Maryland. He has been a senior research associate at the Urban Institute and is chair of the Conference on Research in Income and Wealth of the National Bureau of Economic Research. Michael Harper is chief of the Division of Productivity Research at the Bureau of Labor Statistics. Edwin R. Dean, formerly associate commissioner for Productivity and Technology at the Bureau of Labor Statistics, is adjunct professor of economics at The George Washington University.
Book Synopsis The Shape of Aggregate Production Functions by : Jakub Growiec
Download or read book The Shape of Aggregate Production Functions written by Jakub Growiec and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The article provides multifaceted evidence on the shape of the aggregate country-level production function, derived from the World Technology Frontier, estimated on the basis of annual data on inputs and output in 19 highly developed OECD countries in the period 1970-2004. A comparison of its estimates based on Data Envelopment Analysis and Bayesian Stochastic Frontier Analysis uncovers a number of significant discrepancies between the nonparametric estimates of the frontier and the Cobb-Douglas and translog production functions in terms of implied efficiency levels, partial elasticities, and returns-to-scale properties. Furthermore, the two latter characteristics as well as elasticities of substitution are found to differ markedly across countries and time, providing strong evidence against the constant-returns-to-scale (CRS) Cobb-Douglas specification, frequently used in related literature. We also find notable departures from perfect substitutability between unskilled and skilled labor, consistent with the hypotheses of skill-biased technical change and capital-skill complementarity. In the Appendix, as a corollary from our results, we have also conducted a series of development accounting and growth accounting exercises.
Book Synopsis Economic Change and the Aggregate Production Function by : Francesco A. Franco
Download or read book Economic Change and the Aggregate Production Function written by Francesco A. Franco and published by . This book was released on 2006 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The aggregate production function is at the center of contemporaneous macroeconomics. Both growth and business cycle theories offer predictions that depend on the specification of the aggregate technology. In this paper I postulate that the specification of the aggregate technology is endogenous and I study if the aggregate production function mutates in response to changes in the economic environment. To some extent the previous statement is obvious: the aggregate production function is, leaving existence issues aside, the aggregation of all the micro-technologies present in the economy. If the micro-technologies change in time so should do the aggregate technology. I define the aggregate short-run technology and the aggregate long-run technology respectively a mapping from the variable input to output and a mapping from aggregate investment to future capacity. To study mutations that affect short run fluctuations I consider the aggregate output elasticity with respect to the labor supply shocks. To study mutations that affect the long-run I consider the elasticity of capacity with respect to investment. I use a detailed dataset that covers the US manufactirung sector. The results show that the short-run elasticity does not appear to have changed in the sample while the long-run as increased. Finally I show that the long-run technology is a complicated function but that is well approximated by a Cobb-Douglas.
Book Synopsis Endogenous Capital-and Labor-Augmenting by : Andreas Irmen
Download or read book Endogenous Capital-and Labor-Augmenting written by Andreas Irmen and published by . This book was released on 2016 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: The determinants of the direction of technical change and their implications for economic growth and economic policy are studied in the one-sector neoclassical growth model of Ramsey, Cass, and Koopmans extended to allow for endogenous capital-and labor-augmenting technical change. We develop a novel micro-foundation for the competitive production sector that rests on the idea that the fabrication of output requires tasks to be performed by capital and labor. Firms may engage in innovation investments that increase the productivity of capital and labor in the performance of their respective tasks. These investments are associated with new technological knowledge that accumulates over time and sustains long-run growth. We show that the equilibrium allocation is not Pareto-efficient since both forms of technical change give rise to an inter-temporal knowledge externality. An appropriate policy of investment subsidies may implement the efficient allocation.
Book Synopsis Saving and Endogenous Growth by : Willem H. Buiter
Download or read book Saving and Endogenous Growth written by Willem H. Buiter and published by . This book was released on 1991 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Factor-Eliminating Technical Change by : Pietro F. Peretto
Download or read book Factor-Eliminating Technical Change written by Pietro F. Peretto and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Endogenous growth requires that non-reproducible factors of production be either augmented or eliminated. Attention heretofore has focused almost exclusively on augmentation. In contrast, we study factor elimination. Maximizing agents decide when to reduce the importance of non-reproducible factors. We use a Cobb-Douglas production function with two factors of production, one reproducible ("capital") and one not ("labor"). There is no augmenting progress of any kind, thus excluding the standard engine of growth. What is new is the possibility of changing factor intensities endogenously by spending resources on R&D. The economy starts with no capital and no knowledge of how to use it. By conducting R&D, the economy learns new technologies that use capital, which then is built. There are two possible ultimate outcomes: the economy may achieve perpetual growth, or it may stagnate with no growth. The fiijrst outcome is an asymptotic version of the AK model of endogenous growth, and the second outcome is the standard Solow model in the absence of any exogenous sources of growth. Which outcome is achieved depends on parameter values of saving and production, and there always is a feasible saving rate that will give the perpetual growth outcome. The model thus provides a theory of the endogenous emergence of a production technology with constant returns to the reproducible factors, that is, one that is capable of supporting perpetual economic growth. The model also allows derivation of the full transition dynamics, which have interesting properties. One especially notable feature is that the origin is not a steady state. An economy that starts with pure labor production becomes industrialized through its own efforts. The theory thus offers a purely endogenous explanation for the transition from a primitive to a developed economy, in contrast to several well-known theories. Several aspects of the transition paths accord with the evidence, suggesting that the theory is reasonable. In contrast to almost all the existing endogenous growth literature, neither monopoly power nor an externality is a necessary condition for endogenous growth. It is sufficient that firms be able to appropriate the results of their research and development efforts.
Book Synopsis Indivisibilities and Capital Market Imperfections in an Endogenous Growth Model by : Louis M. Chan
Download or read book Indivisibilities and Capital Market Imperfections in an Endogenous Growth Model written by Louis M. Chan and published by . This book was released on 1994 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Economic Growth, second edition by : Robert J. Barro
Download or read book Economic Growth, second edition written by Robert J. Barro and published by MIT Press. This book was released on 2003-10-10 with total page 676 pages. Available in PDF, EPUB and Kindle. Book excerpt: The long-awaited second edition of an important textbook on economic growth—a major revision incorporating the most recent work on the subject. This graduate level text on economic growth surveys neoclassical and more recent growth theories, stressing their empirical implications and the relation of theory to data and evidence. The authors have undertaken a major revision for the long-awaited second edition of this widely used text, the first modern textbook devoted to growth theory. The book has been expanded in many areas and incorporates the latest research. After an introductory discussion of economic growth, the book examines neoclassical growth theories, from Solow-Swan in the 1950s and Cass-Koopmans in the 1960s to more recent refinements; this is followed by a discussion of extensions to the model, with expanded treatment in this edition of heterogenity of households. The book then turns to endogenous growth theory, discussing, among other topics, models of endogenous technological progress (with an expanded discussion in this edition of the role of outside competition in the growth process), technological diffusion, and an endogenous determination of labor supply and population. The authors then explain the essentials of growth accounting and apply this framework to endogenous growth models. The final chapters cover empirical analysis of regions and empirical evidence on economic growth for a broad panel of countries from 1960 to 2000. The updated treatment of cross-country growth regressions for this edition uses the new Summers-Heston data set on world income distribution compiled through 2000.
Book Synopsis Endogenous Innovation by : Cristiano Antonelli
Download or read book Endogenous Innovation written by Cristiano Antonelli and published by Edward Elgar Publishing. This book was released on with total page 304 pages. Available in PDF, EPUB and Kindle. Book excerpt: This ground-breaking new book builds upon the Schumpeterian creative response. The author shows that firms, in out-of-equilibrium conditions, try and react by means of introducing innovations. The success of their reaction is contingent upon their access conditions to knowledge, which are shaped by the system in which they operate. The emergence of new innovations can, in turn, knock firms further out-of-equilibrium and cause changes in the system properties that govern their access to external knowledge. This path dependent loop of interactions between the system properties and the individual actions of firms, accounts for endogenous innovation and the dynamics of the system.
Book Synopsis Factor-Eliminating Technical Change by : Pietro F. Peretto
Download or read book Factor-Eliminating Technical Change written by Pietro F. Peretto and published by . This book was released on 2008 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Endogenous growth requires that non-reproducible factors of production be either augmented or eliminated. Attention heretofore has focused almost exclusively on augmentation. In contrast, we study factor elimination. Maximizing agents decide when to reduce the importance of non-reproducible factors. We use a Cobb-Douglas production function with two factors of production, one reproducible (quot;capitalquot;) and one not (quot;laborquot;). There is no augmenting progress of any kind, thus excluding the standard engine of growth. What is new is the possibility of changing factor intensities endogenously by spending resources on Ramp;D. The economy starts with no capital and no knowledge of how to use it. By conducting Ramp;D, the economy learns new technologies that use capital, which then is built. There are two possible ultimate outcomes: the economy may achieve perpetual growth, or it may stagnate with no growth. The first outcome is an asymptotic version of the AK model of endogenous growth, and the second outcome is the standard Solow model in the absence of any exogenous sources of growth. Which outcome is achieved depends on parameter values of saving and production, and there always is a feasible saving rate that will give the perpetual growth outcome. The model thus provides a theory of the endogenous emergence of a production technology with constant returns to the reproducible factors, that is, one that is capable of supporting perpetual economic growth. The model also allows derivation of the full transition dynamics, which have interesting properties. One especially notable feature is that the origin is not a steady state. An economy that starts with pure labor production becomes industrialized through its own efforts. The theory thus offers a purely endogenous explanation for the transition from a primitive to a developed economy, in contrast to several well-known theories. Several aspects of the transition paths accord with the evidence, suggesting that the theory is reasonable. In contrast to almost all the existing endogenous growth literature, neither monopoly power nor an externality is a necessary condition for endogenous growth. It is sufficient that firms be able to appropriate the results of their research and development efforts.
Book Synopsis Labor- and Capital-augmenting Technical Change by : Daron Acemoglu
Download or read book Labor- and Capital-augmenting Technical Change written by Daron Acemoglu and published by . This book was released on 2002 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: I analyze an economy in which firms can undertake both labor- and capital-augmenting technological improvements. In the long run, the economy resembles the standard growth model with purely labor-augmenting technical change, and the share of labor in GDP is constant. Along the transition path, however, there is capital-augmenting technical change and factor shares change. Tax policy and changes in labor supply or savings typically change factor shares in the short run, but have no or little effect on the long-run factor distribution of income. Keywords: Economic Growth, Endogenous Growth, Factor Shares, Technical Change. JEL Classifications: O33, O14, O31, E25.
