Abstract
Technological advance is often embodied in capital inputs, like computers, airplanes, and robots. This paper builds a framework where capital inputs advance through (i) increased automation and (ii) increased productivity. The interplay of these two innovation dimensions can produce balanced growth, satisfying the Uzawa Growth Theorem even though technological progress is capital-embodied. The framework can further address structural transformation, general-purpose technologies, the limited macroeconomic impact of computing, and declining productivity growth and labor shares. Overall, this tractable framework can help resolve puzzling tensions between micro-level observations of innovation and balanced growth while providing new perspectives on numerous macroeconomic phenomena.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1448-1487 |
| Number of pages | 40 |
| Journal | American Economic Review |
| Volume | 114 |
| Issue number | 5 |
| DOIs | |
| State | Published - May 2024 |
Funding
We gratefully acknowledge grant support from the Air Force Office of Scientific Research under Minerva award FA9550-19-1-0354. We thank Daron Acemoglu, Lawrence Christiano, Chad Jones, Kiminori Matsuyama, Ezra Oberfield, seminar participants at Clemson University, Columbia University, Northwestern University, and Princeton University, and conference participants at the AEA Meetings and NBER Summer Institute for many helpful comments. * Jones: Northwestern University and NBER (email: [email protected]); Liu: Northwestern University (email: [email protected]). Arnaud Costinot was the coeditor for this article. We gratefully acknowledge grant support from the Air Force Office of Scientific Research under Minerva award FA9550-19-1-0354. We thank Daron Acemoglu, Lawrence Christiano, Chad Jones, Kiminori Matsuyama, Ezra Oberfield, seminar participants at Clemson University, Columbia University, Northwestern University, and Princeton University, and conference participants at the AEA Meetings and NBER Summer Institute for many helpful comments.
ASJC Scopus subject areas
- Economics and Econometrics
