Directed technological change from an empirical perspective
Abstract: Directed technological change is very important, since it determines(for instance) the rate of resource exploitation. The long term relationshipbetween resource prices and demand needs to be understood better,in the light of new theories which have been developed to a greatextent by Acemoglu; in Acemoglu’s model, there either exists a balancedgrowth path (complements) or a corner solution is approached(substitutes), depending on the elasticity of substitution. In this thesisthe elasticity of substitution between labour and metals as well asbetween aluminium and iron is estimated by OLS regression using aCES production function and the Nerlove model. The relative factorshares are examined. The former two are suggested to be substitutes,the latter ones complements. This is surprising, it can however be explainedby the use of aggregate data which will show the total sum offactor relations over all sectors. In further work it would be interestingto limit the analysis to one economic sector; alternatively, existingmodels need to be improved in order to reflect changing sector sizes.
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