The Shape of Production Functions and the Direction of Technical Change
This paper views the standard production function in macroeconomics as a reduced form and derives its properties from microfoundations. The shape of this production function is governed by the distribution of ideas. If that distribution is Pareto, then two results obtain: the global production function is Cobb-Douglas, and technical change in the long run is labor-augmenting. Kortum showed that Pareto distributions are necessary if search-based idea models are to exhibit steady-state growth. Here we show that this same assumption delivers the additional results about the shape of the production function and the direction of technical change. © 2005 MIT Press
Year of publication: |
2005
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Authors: | Jones, Charles I. |
Published in: |
The Quarterly Journal of Economics. - MIT Press. - Vol. 120.2005, 2, p. 517-549
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Publisher: |
MIT Press |
Saved in:
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