Abstract
In this chapter we try to show that a constant return to scale (CRS) technology on reproducible factors is not, by itself, a sufficient condition for endogenous growth. The literature has always relied on the CRS hypothesis and has implicitly assumed that accumulation activity is not a choosable factor. Actually, the entire time, optimally allocated, either by the planner or by individuals, is dedicated to accumulating reproducible factors which have CRS: endogenous growth is therefore a necessary result. In other words, CRS is a sufficient condition if and only if the allocation of time is never affected by the rates of growth or by the levels of the variables.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
