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Andreas Irmen
''Adjustment costs in a variant of Uzawa's steady-state growth theorem''
( 2013, Vol. 33 No.4 )
Uzawa´s theorem (Uzawa (1961)) is extended to allow for adjustment costs in the process of capital accumulation. A new steady-state growth theorem with adjustment costs establishes that capital-augmenting technical change may arise in steady state. This is in sharp contrast to Uzawa´s original finding. In a growing economy this possibility arises since diminishing returns in the production of capital cause a gap between the growth of gross capital investments and the growth of capital. In steady state, capital-augmenting technical change has the role to fill this gap. The discussion of the new theorem characterizes the conditions under which a steady-state path with capital-augmenting technical change exists.
Keywords: Steady-State Growth, Capital Accumulation, Adjustment Costs, Uzawa´s Theorem
JEL: E1 - General Aggregative Models: General
O4 - Economic Growth and Aggregate Productivity: General
Manuscript Received : Sep 20 2013 Manuscript Accepted : Dec 03 2013

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