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A Generalized Uzawa Growth Theorem

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  • Gregory Casey
  • Ryo Horii

Abstract

We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. Balanced growth with capital-augmenting technical change is possible when capital has a unitary elasticity of substitution with at least one other factor of production. Thus, a neoclassical growth model with three or more factors of production can be consistent with empirical evidence on both the capital-labor elasticity of substitution and the declining price of investment relative to consumption. In a three-factor model calibrated to US data, medium-run fluctuations in the investment price explain labor share movements from 1960-2000, but not the subsequent fall in the labor share.

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  • Gregory Casey & Ryo Horii, 2023. "A Generalized Uzawa Growth Theorem," ISER Discussion Paper 1215, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1215
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    2. Andreas Irmen, 2023. "Endogenous Working Hours, Overlapping Generations and Balanced Neoclassical Growth," DEM Discussion Paper Series 23-08, Department of Economics at the University of Luxembourg.

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