Publication Type
Working Paper
Version
publishedVersion
Publication Date
1-2003
Abstract
The endogenous growth literature focuses exclusively on Cobb-Douglas. Elasticities other than unity are ignored. A recent paper by Klump and Grandville (2000) examined other elasticities but assumed an exogenous saving rate. By contrast, this paper studies elasticity and endogenous growth. Endogeneity is important since elasticity preserves capital’s productivity and encourages saving. Two models are presented. The first assumes exogenous technological change. We find elasticity to have a positive level effect on income. No rate of growth effect is found. The second model allows learning by doing from capital accumulation. In addition to the level effect, rate of growth effects are found.
Keywords
endogenous growth, elasticity of substitution, level effect, rate of growth effect
Discipline
Growth and Development | Macroeconomics
Research Areas
Macroeconomics
Volume
06-2003
First Page
1
Last Page
22
Publisher
SMU Economics and Statistics Working Paper Series, No. 06-2003
City or Country
Singapore
Citation
LEUNG, Hing-Man.
The Elasticity of Substitution and Endogenous Growth. (2003). 06-2003, 1-22.
Available at: https://ink.library.smu.edu.sg/soe_research/682
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.