Path dependence and stagnation in a classical growth model

Abstract This paper embeds a technical progress function in classical growth model and studies the effects of permanent changes parameters temporary shocks such as pandemics. Technical change is driven by dynamic economies scale responds to distributional forces: wage share regulates labour-saving employment its capital-using bias. The features path dependence employment-population rate output-capital ratio. Population distribution can respond rate. Interpreted through model, secular stagnation under neoliberal capitalism has been combination diminished investment reduced worker bargaining power more than slower population growth. A unfavourable shock ratio will permanently reduce In fully endogenous this increase profit rates change, capital accumulation,