TY  - JOUR
AU  - Jones,Charles I.
TI  - The Shape of Production Function and the Direction of Technical Change
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10457
PY  - 2004
Y2  - May 2004
UR  - http://www.nber.org/papers/w10457
L1  - http://www.nber.org/papers/w10457.pdf
N1  - Author contact info:
Charles I. Jones
Graduate School of Business
Stanford University
655 Knight Way
Stanford, CA 94305-4800
Tel: 510/288-8650
Fax: 650/725-0468
E-Mail: chad.jones@stanford.edu
AB  - 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.
ER  -