J. Bradford DeLong
If there were no technological change--no new inventions or innovations to create newer and better ways of doing things--then output per worker and capital per worker would first head for and then remain at their steady-state values.
But there is technological change. And the invention of new and better ways of making things continually pushes the production function outward. So the economy's steady-state is also pushed outward and upward to higher and higher levels of output per worker and capital per worker. And as the economy follows its steady-state, output and capital per worker grow.
|Convergence to the Steady State The Steady-State Capital-Output Ratio|
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