Definition of Capital-Augmenting:
Capital-augmenting is one of the ways in which an effectiveness variable could be included in a
production function in a Solow model. If effectiveness A is multiplied
by capital K but not by labor L, then we say the effectiveness variable is
capital-augmenting.
For example, in the model of output Y where Y=(AK)aL1-a
the effectiveness variable A is capital-augmenting but in the model
Y=AKaL1-a it is not.
Another example would be a capital utilization variable as measured say by
electricity usage. (E.g., as in Eichenbaum).
An example: in the context of a railroad, automatic railroad signaling,
track-switching, and car-coupling devices are capital-augmenting.
From Moses Abramovitz and Paul A. David, 1996. "Convergence and Deferred
Catch-up: productivity leadership and the waning of American exceptionalism."
In Mosaic of Economic Growth, edited by Ralph Landau, Timothy Taylor,
and Gavin Wright.
(Econterms)
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