A Framework for Economic Growth with Capital-Embodied Technical Change

Technological advance is often embodied in capital inputs , like computers , airplanes , and robots. This paper builds a framework where capital inputs advance through ( i ) increased automation and ( ii ) increased productivity. The interplay of these two innovation dimensions can produce balanced growth , satisfying the Uzawa Growth Theorem even though technological progress is capital -embodied. The framework can further address structural transformation , general-purpose technologies , the limited macroeconomic impact of computing , and declining productivity growth and labor shares. Overall , this tractable framework can help resolve puzzling tensions between micro -level observations of innovation and balanced growth while providing new perspectives on numerous macroeconomic phenomena. ( JEL E22, E23, E24, E25, L16, O33, O41 )