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on Economic Growth |
| By: | Luintel, Kul B (Cardiff Business School); Pourpourides, Panayiotis M. (Cardiff Business School) |
| Abstract: | A consensus in the growth literature is that scale effects of R&D are non-existent across mature industrialized economies. However, the scrutiny across emerging economies is lacklustre at best. The empirical studies of scale effects also leave the issues of unbalanced regression (non-standard distribution) largely unaddressed. In this paper, we conduct separate but parallel empirical scrutiny of scale effects across the panels of industrialized and emerging countries, clearly addressing these econometric issues, and employing a more realistic measure of the scale of R&D activities than has been applied hitherto. We provide parallel but novel estimates of significant scale effects across emerging countries, and their absence across developed countries. We then propose an endogenous growth model and show that scale effects exist during growth transitions but not at the vicinity of the long-run equilibrium, which reconciles our results. Thus, we shed light on a long-debated and important issue. Estimates of our model’s predictions reveal that the long-run growth rates of per capita real GDP and TFP are driven by the growth rates of technological innovation and aggregate employment, except that only the former matters for the TFP growth across emerging countries. |
| Keywords: | Endogenous Technical Change; Scale Effects; Panel Integration and Cointegration |
| JEL: | O3 O4 O14 O33 O47 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2022/19&r=gro |
| By: | Ellora Derenoncourt (Princeton University); Chi Hyun (University of Bonn); Moritz Kuhn (University of Bonn); Moritz Schularick (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, University of Bonn, CEPR - Center for Economic Policy Research - CEPR) |
| Abstract: | The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped. |
| Date: | 2022–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03880971&r=gro |
| By: | Miriam Fritzsche (Humboldt-University Berlin); Nikolaus Wolf (Humboldt-University Berlin, CEPR, CESifo) |
| Keywords: | Coal, Oil invasion, Education, Reinvention, Economic Growth |
| JEL: | O13 Q32 N13 R10 I25 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:anj:wpaper:029&r=gro |
| By: | Helfer, Helena |
| Abstract: | Theoretical and empirical evidence on the relationship between institutions and economic prosperity remains ambiguous, even though it has been part of scholarly discourse for decades. The present study adds to this discussion by introducing a bundled approach for measuring institutions. This approach takes into account interrelations in form of hierarchies between political, economic and the societal institutions and thereby adds to the literature that deals with the mechanisms of economic growth from an institutional perspective. Based on a panel of 153 countries from 1995 to 2016, we find that political institutions establish a deeprooted framework in which societal institutions, such as education and health care, act as main drivers of growth processes. |
| Keywords: | Institutional Hierarchy,Economic Growth,Bundled Measurement |
| JEL: | H00 O11 O43 P51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ciwdps:22022&r=gro |
| By: | Cavallo, Eduardo A.; Becerra, Oscar; Acevedo, Laura |
| Abstract: | This paper estimates the impact of catastrophic natural disasters on economic growth using an event study methodology on a country panel dataset from 1970 to 2019. The severity of the events is determined by the associated mortality. We find that affected economies which, given the way natural disasters are ranked, comprise mainly developing countries, suffer an average loss between 2.1 and 3.7 percentage points (p.p.). The estimated loss is not offset by above-average growth rates in the disasters aftermath. In contrast, when the severity of the events is determined by physical intensity rather than by mortality, which implies a more balanced estimating sample of developed and developing economies, the estimated effects on growth are negligible. Thus, the negative impacts of natural disasters on economic growth are larger for poorer countries, suggesting that the impact of natural disasters on growth is an economic development issue. |
| Keywords: | Event study |
| JEL: | Q54 O47 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:11662&r=gro |
| By: | Stephen J Terry (BU - Boston University [Boston], NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research); Thomas Chaney (USC - University of Southern California, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Konrad B Burchardi (Stockholm University); Lisa Tarquinio (UWO - University of Western Ontario); Tarek A Hassan (BU - Boston University [Boston], NBER - National Bureau of Economic Research [New York] - NBER - The National Bureau of Economic Research, CEPR - Center for Economic Policy Research - CEPR) |
| Abstract: | We show a causal impact of immigration on innovation and growth in US counties. To identify the causal impact of immigration, we use 130 years of detailed data on migrations from foreign countries to US counties to isolate quasi-random variation in the ancestry composition of US counties; interacting this plausibly exogenous variation in ancestry composition with the recent inflows of migrants from different origins, we predict the total number of migrants flowing into each US county in recent decades. We show immigration has a positive causal impact on innovation, measured as patenting of local firms, and on economic growth, measured as real income growth for native workers. We interpret those results through the lens of a quantitative model of endogenous growth and migrations. A structural estimation of this model targeting the well identified causal impact of migration on innovation suggests the large inflow of foreign migrants into the US since 1965 may have contributed to an additional 8% growth in innovation and 5% growth in wages. |
| Keywords: | Migrations, Innovation, Patents, Endogenous growth, Dynamism |
| Date: | 2022–11–24 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03869993&r=gro |
| By: | Helfer, Helena |
| Abstract: | While global studies on drivers of economic growth are useful to derive global tendencies, a more insightful analysis that leads to explicit policy implications is possible when investigating smaller entities. In this study, we focus on a panel of 40 African countries located in the Sub-Saharan region. The panel covers the times period from 1995 to 2016. We combine data on institutions with data on economic growth in order to determine which institutions are especially conductive to growth. Our analysis is framed by the approach of a hierarchy of institutions in which political institutions provide a framework in which contemporary political, economic and societal institutions develop and foster economic growht. This framework provides a solid foundation for empirical analysis and allows for multi-facetted interpretation. We find that political institutions, and among them political rights and civil liberties, are the most conductive to economic growth in the region. |
| Keywords: | Economic Growth,Institutions,Sub-Saharan Afric |
| JEL: | H00 O11 O43 P51 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ciwdps:32022&r=gro |
| By: | Tamay Besiroglu; Nicholas Emery-Xu; Neil Thompson |
| Abstract: | Since its emergence around 2010, deep learning has rapidly become the most important technique in Artificial Intelligence (AI), producing an array of scientific firsts in areas as diverse as protein folding, drug discovery, integrated chip design, and weather prediction. As more scientists and engineers adopt deep learning, it is important to consider what effect widespread deployment would have on scientific progress and, ultimately, economic growth. We assess this impact by estimating the idea production function for AI in two computer vision tasks that are considered key test-beds for deep learning and show that AI idea production is notably more capital-intensive than traditional R&D. Because increasing the capital-intensity of R&D accelerates the investments that make scientists and engineers more productive, our work suggests that AI-augmented R&D has the potential to speed up technological change and economic growth. |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2212.08198&r=gro |
| By: | Manuel Funke (Kiel Institute for the World Economy - Kiel Institute for the World Economy); Moritz Schularick (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, University of Bonn, CEPR - Center for Economic Policy Research - CEPR); Christoph Trebesch (Kiel Institute for the World Economy - Kiel Institute for the World Economy, Kiel University, CEPR - Center for Economic Policy Research - CEPR) |
| Abstract: | Populism at the country level is at an all-time high, with more than 25% of nations currently governed by populists. How do economies perform under populist leaders? We build a new longrun cross-country database to study the macroeconomic history of populism. We identify 51 populist presidents and prime ministers from 1900 to 2020 and show that the economic cost of populism is high. After 15 years, GDP per capita is 10% lower compared to a plausible nonpopulist counterfactual. Economic disintegration, decreasing macroeconomic stability, and the erosion of institutions typically go hand in hand with populist rule. |
| Keywords: | Populism, Protectionism, Institutions |
| Date: | 2022–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03881225&r=gro |
| By: | Agustín S. Bénétrix (Department of Economics, Trinity College Dublin); Hayley Pallan (World Bank); Ugo Panizza (Graduate Institute Geneva) |
| Abstract: | This paper revisits the link between FDI and economic growth in emerging and developing economies. When we study the early decades of our sample, we find that there is no statistically significant correlation between FDI and growth for countries with average levels of education or financial depth. In line with previous contributions, we find that this correlation is positive and statistically significant for countries with sufficiently well-developed financial sectors or high levels of human capital. However, we also find that the link between FDI and growth varies over time. For more recent periods, we find a positive and statistically significant relationship between FDI and growth for the average country, with local conditions having a negative effect on this link. We also develop a novel instrument aimed at addressing the endogeneity of FDI inflows. Instrumental variable estimates suggest that our results are unlikely to be driven by endogeneity. |
| Keywords: | FDI,EconomicGrowth,HumanCapital,FinancialDevelopment |
| JEL: | F21 F43 C21 C26 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0722&r=gro |
| By: | Peter Grajzl; Peter Murrell |
| Abstract: | We generate and analyze data pertinent to the role of caselaw in England's economic development during the Industrial Revolution. Applying topic modeling to a corpus of 67,455 reports on English court cases, we construct annual time series of caselaw developments between 1765 and 1865. We then add a real per-capita GDP series to our caselaw series and estimate a structural VAR. Caselaw shocks account for more of the variability in per-capita GDP than do shocks directly to per-capita GDP. The response of per-capita GDP to caselaw innovations critically depends on the legal domain. Developments in caselaw on intellectual property, organizations, debt and finance, and inheritance exerted positive effects while developments in property and ecclesiastical caselaw reduced per-capita GDP. Our analysis uncovers a 'bleak law era' when the legal system misallocated attention between development-promoting and development-hindering areas of law. |
| Keywords: | caselaw, England, economic development, Industrial Revolution, topic modelling, time series |
| JEL: | N13 N43 K10 K30 P48 O17 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10088&r=gro |
| By: | Xindong Xue; W. Robert Reed (University of Canterbury); Robbie C.M. van Aert |
| Abstract: | This study collects and analyses 993 estimates from 81 studies to generate an overall assessment of the empirical literature on social capital and economic growth. Using a variety of estimation procedures, we reach the following conclusions. First, there is evidence that a meaningful relationship exists between social capital and economic growth. The estimated sizes of the overall mean effect in our specifications range from somewhat larger than “small” to somewhat larger than “medium” depending on the estimation method we use. Second, our analysis does not indicate that the associated empirical literature is distorted by publication bias. Third, there is evidence to indicate that cognitive social capital (e.g., trust) has a larger effect on economic growth than other types of social capital, though the evidence is not strong. Finally, while the coefficient signs of our meta-regression analysis lined up with prior expectations, the associated effect sizes were generally small to negligible. |
| Keywords: | Social capital, Economic growth, Cognitive social capital, Structural social capital, Meta-analysis, Meta-regression, Publication Bias |
| JEL: | B40 O31 O40 O47 R11 Z10 |
| Date: | 2022–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:cbt:econwp:22/20&r=gro |
| By: | Miller, Marcus (University of Warwick, CAGE and CEPR) |
| Abstract: | Francis Fukuyama’s bold prediction that Western liberal democracy is ‘the final form of human government’ was promptly challenged by Samuel Huntington, who foresaw the future as a continuing clash of civilisations. This latter view has found support in the recent Beijing declaration by China and Russia of a ‘New World Order’ with distinct spheres of influence for different cultures. After discussing the contrast between such historical perspectives (of ‘immaculate convergence’ versus cultural diversity), we outline two accounts of how forms of governance emerge from competitive struggle ( either domestically or between nation states). However, to set the scene for applying these perspectives to current events, the paper begins with a summary of three eras of political economy post World War II - including the current ‘age of the strongman’, to use the terminology of Gideon Rachman. Subsequently, these various perspectives are employed to see what light they may throw on the disastrous turn of events following the Beijing declaration, with a focus on Russia, where the history of a powerful central state has played a crucial role. How enduring the Russian example may prove in the Darwinian struggle of cultural competition is, of course, a key issue for our time. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1441&r=gro |
| By: | Simo-Kengne, Beatrice D. (Center for Mathematical Economics, Bielefeld University); Riedel, Frank (Center for Mathematical Economics, Bielefeld University); Demeze-Jouatsa, Ghislain-Herman (Center for Mathematical Economics, Bielefeld University) |
| Abstract: | We examine the effect of demographic shifts on asset prices in an overlapping generations model with endogenous population dynamics. We establish a robust inverse relationship between returns and the old dependency ratio. We document the absence of a simple monotonic relationship between asset prices and demographic parameters. Returns depend on the joint evolution of fertility, mortality, and lifetime work in a complex way that we quantify. We carry out an extensive empirical study involving 55 countries. Both theoretical and empirical findings reconcile existing propositions on the population age structure and asset returns for riskless and short-lived risky assets. |
| Keywords: | Demography, Asset prices, OLG, Panel cointegration, Granger causality |
| Date: | 2022–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:bie:wpaper:672&r=gro |