TY  - JOUR
T1  - THE ELASTICITY OF SUBSTITUTION AND ECONOMIC GROWTH RATE: WHAT LINKAGE?
AU  - Özkaya, Ata
PY  - 2022
DA  - October
JF  - Florya Chronicles of Political Economy
JO  - FCPE
PB  - İstanbul Aydın Üniversitesi
WT  - DergiPark
SN  - 2149-5750
SP  - 139
EP  - 151
VL  - 8
IS  - 2
LA  - en
AB  - We reconsider the effect of elasticity of substitution on: income per-capita, growth rate of capital-labor ratio, growth rate of income per-capita, the steady-state capital-labor ratio and the steady-state income per-capita, respectively. We demonstrate that: first, both income per-capita and growth rate of capital-labor ratio are decreasing functions of elasticity of substitution. Second, we find out that an increase in substitution elasticity leads to an increase or a decrease in the growth rate of income per-capita depending on initial-terminal conditions of the production function. Moreover, we demonstrate that at steady-state an increase in  elasticity of substitution decreases both growth rate of capital-labor ratio and growth rate of income per- capita. Finally, we revise the erroneous result that there is a threshold of elasticity of substitution for which there is no steady-state equilibrium and for which ever-sustained growth is entailed. Instead, as a policy instrument increasing the minimum marginal product of labor is demonstrated to increase the growth rate of income per-capita.
KW  - Economic Growth
KW  - Constant Elasticity of Substitution
KW  - Production Function
KW  - Dynamical Equilibrium
KW  - Steady-State Growth Rate
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UR  - https://dergipark.org.tr/tr/pub/fcpe/issue//1123070
L1  - https://dergipark.org.tr/tr/download/article-file/2454603
ER  -