Why in most macro models technology is labor-augmenting?

General Tech Technology & Software 2 years ago

0 1 0 0 0 tuteeHUB earn credit +10 pts

5 Star Rating 1 Rating

Posted on 16 Aug 2022, this text provides information on Technology & Software related to General Tech. Please note that while accuracy is prioritized, the data presented might not be entirely correct or up-to-date. This information is offered for general knowledge and informational purposes only, and should not be considered as a substitute for professional advice.

Take Quiz To Earn Credits!

Turn Your Knowledge into Earnings.

tuteehub_quiz

Answers (1)

Post Answer
profilepic.png
manpreet Tuteehub forum best answer Best Answer 2 years ago

Take Romer's advanced macro book as reference. In it the Solow model,the Ramsey model and the Diamond OLG all contain the fundamental AtAt variable representing technological progress.
In all these models, technology affects only labor, that is:
Yt=F(Kt,AtLt)Yt=F(Kt,AtLt)

Now my question is why is such assumption so prevalent in these models. It seems to me that when we imagine technology as affecting output we think of the Northrop loom, the Bessemer steel, the container, the railroad. You know, stuff. All these seem to me to be mostly capital-augmenting technologies.
So why do we tend to assume labor-augmenting technology instead?

No matter what stage you're at in your education or career, TuteeHub will help you reach the next level that you're aiming for. Simply,Choose a subject/topic and get started in self-paced practice sessions to improve your knowledge and scores.

tuteehub community

Join Our Community Today

Ready to take your education and career to the next level? Register today and join our growing community of learners and professionals.

tuteehub community