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Cost share‐induced technological change and Kaldor’s stylized facts

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  • Eric Kemp‐Benedict

Abstract

This paper presents a theory of induced technological change in which firms pursue a random, local, and bounded search for productivity‐enhancing innovations. Firms implement profitable innovations at fixed prices, which then spread through the economy. After diffusion, all firms adjust prices and wages. The model is consistent with a variety of price‐setting behaviors, which determine equilibrium positions characterized by constant cost shares and productivity growth rates. A fixed mark‐up can yield Marx‐biased technological change. Target‐return pricing yields Harrod‐neutral technological change with a fixed wage share as a stable equilibrium, consistent with Kaldor's stylized facts, while allowing for deviations from equilibrium, as observed in the longer historical record.

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  • Eric Kemp‐Benedict, 2019. "Cost share‐induced technological change and Kaldor’s stylized facts," Metroeconomica, Wiley Blackwell, vol. 70(1), pages 2-23, February.
    • Handle: RePEc:bla:metroe:v:70:y:2019:i:1:p:2-23
    DOI: 10.1111/meca.12223
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    Cited by:

    1. Eric Kemp-Benedict, 2022. "A classical-evolutionary model of technological change," Journal of Evolutionary Economics, Springer, vol. 32(4), pages 1303-1343, September.
    2. Eric Kemp‐Benedict, 2020. "Convergence of actual, warranted, and natural growth rates in a Kaleckian–Harrodian‐classical model," Metroeconomica, Wiley Blackwell, vol. 71(4), pages 851-881, November.
    3. Eric Kemp-Benedict & Yun K. Kim, 2018. "Technological Change, Household Debt, and Distribution," Working Papers 2018-02, University of Massachusetts Boston, Economics Department.

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