Introduction to Modern Economic Growth too general to achieve our objective In particular, with this general structure, we may not have balanced growth By balanced growth, we mean a path of the economy consistent with the Kaldor facts (Kaldor, 1963), that is, a path where, while output per capita increases, the capital-output ratio, the interest rate, and the distribution of income between capital and labor remain roughly constant Figure 2.11, for example, shows the evolution of the shares of capital and labor in the US national income Labor and capital share in total value added 100% 90% 80% 70% 60% 50% Labor Capital 40% 30% 20% 10% 1994 1989 1984 1979 1974 1969 1964 1959 1954 1949 1944 1939 1934 1929 0% Figure 2.11 Capital and Labor Share in the U.S GDP Despite fairly large fluctuations, there is no trend in these factors shares Moreover, a range of evidence suggests that there is no apparent trend in interest rates over long time horizons and even in different societies (see, for example, Homer and Sylla, 1991) These facts and the relative constancy of capital-output ratios 80