›
So
A
increases over time!
›
This implies that the
number of effective
workers (
AN
) increases
over time.
24
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Date 09012017
faculty of economics
and business
Technology and the steady state (3)
›
In the long run, capital per
effective worker reaches a
constant level, and so
does output per effective
worker.
›
This implies that output
(
Y
) is growing at the same
rate as effective labour
(
AN
).
25

Date 09012017
faculty of economics
and business
Technology and sustainable growth
›
In the steady state, output (
Y
) grows at the same rate as
effective labour (
AN
); effective labour grows at a rate
(
g
A
+
g
N
);
›
Therefore, output growth in steady state equals (
g
A
+
g
N
).
›
The growth rate of output is independent of the saving
rate.
›
Because output, capital and effective labor all grow at the
same rate, (
g
A
+
g
N
), the steady state of the economy is
also called a state of balanced growth.
26
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