Factor Substitution, Long-Run Equilibrium, and Convergence Speed in the Lucas Model
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Factor Substitution, Long-Run Equilibrium, and Convergence Speed in the Lucas ModelAuthor(s)
Date
2023Citation
Gómez, M. A. (2023). Factor substitution, long-run equilibrium, and convergence speed in the Lucas model. Economics Letters, 232, 111358. 10.1016/j.econlet.2023.111358
Abstract
[Abstract] We study the effect of factor substitution on long-run equilibrium in the Lucas model with CES production. The long-run growth rate does not depend on the elasticity of substitution. However, there is a negative (positive) relationship between the elasticity of factor substitution and the convergence speed if the baseline ratio of physical capital to effective labor is below (above) its steady-state value.
Keywords
Elasticity of substitution
Endogenous growth
Convergence speed
Human capital
Endogenous growth
Convergence speed
Human capital
Description
Financiado para publicación en acceso aberto: Universidade da Coruña/CISUG
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Rights
Atribución-NoComercial 4.0 Internacional (CC BY-NC)
ISSN
0165-1765