Neutral inventions and the stability of growth equilibrium
TL;DRAbstract
In criticizing Hicks's classification of technical inventions, Harrod has proposed a new definition of neutral inventions primarily intended for applications to the problem of economic growth. According to Harrod, a technical invention is defined as neutral if at a constant rate of interest it does not affect the value of the capital coefficient. Harrod's classification has been discussed by J. Robinson who showed graphically that a neutral invention is equivalent to “an all-round increase in the efficiency of labor” (p. 140). The first part of the present article is concerned with precisely formulating Robinson's proposition and characterizing analytically those inventions that are neutral in Harrod's sense.
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In criticizing Hicks's classification of technical inventions, Harrod has proposed a new definition of neutral inventions primarily intended for applications to the problem of economic growth. According to Harrod, a technical invention is defined as neutral if at a constant rate of interest it does not affect the value of the capital coefficient. Harrod's classification has been discussed by J. Robinson who showed graphically that a neutral invention is equivalent to “an all-round increase in the efficiency of labor” (p. 140). The first part of the present article is concerned with precisely formulating Robinson's proposition and characterizing analytically those inventions that are neutral in Harrod's sense.
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