Applications of the Richard’s Production function in economics

Abstract

“Mainstream economics discovered that as its modeling techniques became more sophisticated some neglected insights could be brought back in.” Paul R. Krugman (1994) The recent Covid-19 sanitary crisis not only affected the global economy on both sides of the market, supply and demand; but also had different impact in high-income and lowincome countries. Keynesian theory is the most useful theory to analyze economic crisis, however this theory focused in failures on the demand side. In the other hand, there are empirical models that focus on supply side by inspecting the unemployment and its causes, which are mostly demand failures. Motivated by the desire to analyze the impact on the supply side of an exogenous shock, this dissertation consists of a compilation of three neoclassical growth models, we introduce the Richard production function to depict the technological changes and the stages of the industrialization in an economy. The Richard production function has variable marginal productivity and variable marginal returns, these features allow the neoclassical growth models to displays multiple equilibria and lay out the Solow-Sawn model as particular cases of a generalized growth model that we are introducing.