Title: The shape of production function and the direction of technical change
First published: 2004
Description: "This paper views the standard production function in macroeconomics as a reduced form and derives its properties from microfoundations.  The shape of this production function is governed by the distribution of ideas.  If that distribution is Pareto, then two results obtain: the global production function is Cobb-Douglas, and technical change in the long run is labor-augmenting.  Kortum (1997) showed that Pareto distributions are necessary if search-based idea models are to exhibit steady-state growth.  Here we show that this same assumption delivers the additional results about the shape of the production function and the direction of technical change"--National Bureau of Economic Research web site.
Subjects: Econometric models, Technological innovations, Production functions (Economic theory)
LC classification: HB1