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Steady State, Factor Income, and Technological Progress

In: Growth and International Trade

Author

Listed:
  • Karl Farmer

    (University of Graz)

  • Matthias Schelnast

    (University of Graz)

Abstract

This chapter continues the analysis of the basic OLG growth model of the previous chapter. First, the GDP growth rate is defined and related to the growth factor of the (efficiency-weighted) capital intensity. Second, assuming the GDP growth is constant over time and equals the natural growth rate, sufficient conditions for the existence of a unique and globally stable steady state are presented. Third, intergenerational efficiency of the steady state is discussed. Fourth, the comparative dynamics of changes in basic OLG model parameters is illustrated graphically. Fifth, the evolution of the main economic variables, associated with capital intensity along the intertemporal equilibrium path and in steady state, is investigated. Sixth, different concepts of neutral technological progress are compared. Finally, an example of growth accounting is presented in order to demonstrate the empirical significance of technological progress for GDP growth.

Suggested Citation

  • Karl Farmer & Matthias Schelnast, 2021. "Steady State, Factor Income, and Technological Progress," Springer Texts in Business and Economics, in: Growth and International Trade, edition 2, chapter 3, pages 57-82, Springer.
    • Handle: RePEc:spr:sptchp:978-3-662-62943-7_3
    DOI: 10.1007/978-3-662-62943-7_3
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