Solow vs. Solow: Machine Prices and Development
30 Pages Posted: 10 Jul 2000 Last revised: 4 Oct 2010
Date Written: January 1997
Machines are more expensive in poor countries, and the relation is pronounced. It is hard for a Solow (1956) type of model to explain the relation between machine prices and GDP given that in most countries equipment investment is under 10% of GDP. A stronger relation emerges in a Solow (1959) type of vintage model in which technology is embodied in machines.
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