Partly through discussions with Mirrlees, I had become aware that my analysis bore a family resemblance to the “local turnpike theorems” of Dosso, Samuelson and McKenzie, which exploit the fact that the Neumann ray is a saddle point’ in the phase space of all inter-temporally efficient paths. This is in marked contrast to the well known result of Solow for the one-sector world and to the equally familiar two-sector propositions. For some special cases I demonstrated that indeed all equilibrium paths diverged. The same is true of Phelps’ results on the Cobb-Douglas case.Ībstract: Recently I showed that the steady state path of an economy with more than one capital good was not the asymptotic state of all equilibrium paths. Such a case is a limiting and special case of the model of this paper, so that the results of Solow and his colleagues have provided a useful check on my results. ![]() This task, among others, has already been completed by Solow, Tobin, von Weizsacker and Yaari for the case in which the capital-labour ratio is fixed even at the moment of investment. The aim of this paper is to provide a fairly complete and rigorous treatment of the balanced and the efficient growth paths of the model without recourse to unnecessarily restrictive assumptions such as Cobb-Douglas. The term “ putty-clay ”, coined by Phelps, neatly describes these assumptions. In the now standard terminology, technical change is all “ embodied ”. Technical progress takes the form of a flow of new ideas for the construction of investments, but it does not include any new ideas for the more efficient employment of existing investments. ,, , and ) have investigated various properties of a model of economic growth which is characterized by a variable capital-labour ratio at the moment that investment occurs (putty), and a fixed capital-labour ratio thereafter (clay). ![]() Abstract: Following on the work of Johansen and Salter a number of writers (e.g.
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