The Fossil Production Function in a Vintage Model.
This paper extends the fossil production function to incorporate embodied technical change. The fossil production function provides an alternative to the standard neoclassical explanation for the aggregate production function. In a Classical Ricardian spirit, the paper assumes that capital-using, labour saving technical change prevails, and shows that it generates a fossil production function in Cobb-Douglas form. The power term of the production function mediates the viability of new machines. A sufficient condition for viability is that the power term equals or exceeds the profit share on new machines. Empirical estimates show that this sufficient condition is satisfied, a result inconsistent with the neoclassical interpretation of the aggregate production function. Copyright 2002 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia
Year of publication: |
2002
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Authors: | Michl, Thomas R |
Published in: |
Australian Economic Papers. - Wiley Blackwell. - Vol. 41.2002, 1, p. 53-68
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Publisher: |
Wiley Blackwell |
Saved in:
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