Directed Technical Change and Capital Deepening: A Reconsideration of Kaldor’s 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’s technical progress function while
maintaining a marginalist theory of factor prices in the spirit
suggested by von Weizsäcker (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.