MultimediaCreated 3/10/1998 
J. Bradford DeLong
delong@econ.berkeley.edu
http://www.jbradforddelong.net
You can use the economy's aggregate production function and your knowledge of the steadystate capitaloutput ratio to figure out where the economy is heading. If the ratio of output to capital is higher than in steady state, then the capital stock per worker must be growingand the economy must be moving up and to the right along its production function graphed with capital per worker on the horizontal and output per worker on the vertical axis. The economy's steadystatethe point toward which it will head, and at which it will remain is that point on the production function where the outputtocapital ratio (and the capitaloutput ratio, its inverse) is equal to its steadystate value. 

The SteadyState CapitalOutput Ratio Technological Change 
Professor
of Economics J. Bradford DeLong, 601 Evans Hall, #3880
University of California at Berkeley
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