Di Maria, Corrado
- Working Paper
Rights / licenseIn Copyright - Non-Commercial Use Permitted
We analyze a multi-sector growth model with directed technical change where man-made capital and exhaustible resources are essential for production. The relative pro tability of factor-specific innovations endogenously determines whether technical progress will be capital- or resource-augmenting. We show that convergence to balanced growth implies zero capital-augmenting innovations: in the long run, the economy exhibits purely resource-augmenting technical change. This result provides sound microfoundations for the broad class of models of exogenous/endogenous growth where resource-augmenting progress is required to sustain consumption in the long run, contradicting the view that these models are conceptually biased in favor of sustainability. Show more
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Journal / seriesEconomics Working Paper Series
PublisherETH Zurich, Institute of Economic Research (WIF)
SubjectEndogenous Growth; Sustainability; Exhaustible Resources; Directed Technical Change
Organisational unit03635 - Bretschger, Lucas / Bretschger, Lucas
02045 - Dep. Geistes-, Sozial- u. Staatswiss. / Dep. of Humanities, Social and Pol.Sc.
NotesFirst version January 30, 2006. This version March 7, 2006.
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