The Long - Term Suc CES s of the Neoclassical Growth Model ∗

In this paper, we seek to re-establish the link between the CES production function and neoclassical growth theory. We did so in three dimensions. First, we reviewed the increasing importance of the CES technology in modern dynamic macroeconomics, in expanding not only theory but also in addressing important policy questions. Second, we argued that the importance of the CES function in growth theory is intimately linked to ‘normalization’. Finally, we examined the data congruence between CES functions and recent growth patterns in US and euro-area economies, where we apply CES functions with factor-augmenting and time-varying technical progress. JEL: C22, E23, E25, 030, 051.