We show that allowing firms a choice of CES production techniques (via the distribution parameter between capital and labor) can result in a new class of production functions that produces short-run capital-labor complementarity but yields a long-run unit elasticity of substitution. This is...

The elasticity of factor substitution between capital and labor is a crucial parameter in many economic fields. However, despite extensive research, there is no agreement on its value. Utilizing 738 estimates from 41 studies published between 1961 and 2016, this paper provides the first...

We present a simple production technology in which the choice of production technique results in a balanced growth path even in the presence of capital-augmenting technical progress. Given a particular choice of technique, the production function is CES with a less than unitary elasticity of...

This paper follows Jones (2005) in his approach to deriving the global production function from microfoundations. His framework is generalized by allowing for dependence between the Pareto distributions of labor- and capital-augmenting developments. Using the Clayton copula family to capture...

This paper uses a novel dataset to test the capital-skill complementarity hypothesis in a cross-section of countries. It is shown that for the full sample there exists evidence in favor of the hypothesis. When we arbitrarily split the full sample into OECD and non-OECD countries, we find no...

This paper provides the first comprehensive review of the empirical and theoretical literature on the determinants of the elasticity of substitution between capital and labor. Our focus is on the two-input constant elasticity of substitution (CES) production function. By example of the U.S., we...

This study analyzes the conditions for the existence of a non-trivial steady-state equilibrium in an overlapping generations (OLG) model. Galor and Ryder (1989) and subsequent studies established the conditions for the existence of equilibrium in a OLG model. Although commonly used and...