Directed Technical Change and Capital Deepening: A Reconsideration of Kaldors Technical Progress Function
This note proposes a growth model that is derived from the standard Solow growth model by replacing the neoclassical production function with Kaldor\u2019s technical progress function while maintaining a marginalist theory of factor prices in the spirit suggested by von Weizs\xe4cker (1966, 1966b). The hybrid model so obtained accounts for balanced growth in a way that appears less arbitrary than the Solow model, especially because it directly accounts for Harrod neutral technical change, without any need for further assumptions.