Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5098736 | Journal of Economic Dynamics and Control | 2013 | 15 Pages |
Abstract
Based on a tractable “endogeneous technology choice” framework, we provide a microfoundation for aggregate normalized constant elasticity of substitution (CES) production functions with non-neutral, factor-augmenting technical change. In this framework, firms are allowed to choose unit productivities of capital and labor optimally from a technology menu constructed under the assumption that unit factor productivities (UFPs) are independently Weibull-distributed. The Weibull distribution itself is also microfounded here: based on extreme value theory, it is found to be an accurate and robust approximation of the true UFP distribution if technologies consist of a large number of complementary components.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Jakub Growiec,