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on Economic Growth |
| By: | Boese-Schlosser, Vanessa A.; Eberhardt, Markus |
| Abstract: | Recent empirical work has established that 'democracy causes growth'. In this paper, we determine the underlying institutions which drive this relationship using data from the Varieties of Democracy project. We sketch how incentives and opportunities as well as the distribution of political power shaped by underlying institutions, in combination with the extent of the market, endogenously form an 'economic blueprint for growth', which likely differs across countries. We take our model to the data by adopting novel heterogeneous treatment effects estimators, which allow for non-parallel trends and selection into institutional change, and run horse races between underlying institutions. We find that freedom of expression, clean elections, and legislative executive constraints are the foremost drivers of long-run development. Erosion of these institutions, as witnessed recently in many countries, may jeopardise the perpetual growth effect of becoming a liberal democracy we establish for the post-WWII period. |
| Keywords: | Democracy, Growth, Institutions, Interactive Fixed Effects, Difference-in-Difference |
| JEL: | O10 P16 C23 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbtod:spv2023501&r=gro |
| By: | Iram Gleriaa; Sergio Da Silvab; Leon Brenig; Tarc{\i}sio M. Rocha Filho; Annibal Figueiredo |
| Abstract: | In this study, we analyze the relationship between human population growth and economic dynamics. To do so, we present a modified version of the Verhulst model and the Solow model, which together simulate population dynamics and the role of economic variables in capital accumulation. The model incorporates support and foraging functions, which participate in the dynamic relationship between population growth and the creation and destruction of carrying capacity. The validity of the model is demonstrated using empirical data. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2308.08315&r=gro |
| By: | Miller, Marcus (University of Warwick) |
| Abstract: | For path-breaking insights on how prices can guide the efficient allocation of resources and on how innovation and investment can spur economic growth, Adam Smith is justly renowned. He was, however, well aware of problems posed by market dominance – specifically in banking and, more generally, wherever getting to the scale that delivers increasing returns leads to monopolistic behaviour. For the historical record, we draw on the recent wide-ranging survey by Acemoglu and Johnson on how the benefits of innovation have been spread across society since the Industrial Revolution. We also consider these issues in the context of geo-political competition. |
| Keywords: | The Wealth of Nations by Adam Smith ; Increasing Returns to Scale; monopoly ; excess risk-taking ; case studies of economic history ; geo-political competition. JEL Codes: B12 ; D61 ; E25 ; L12 ; O33 ; P51 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1470&r=gro |
| By: | Tomohiro Hirano; Alexis Akira Toda |
| Abstract: | We study the long-run behavior of land prices when land plays the dual role of factor of production and store of value. In modern economies where technological progress is faster in non-land sectors, when the elasticity of substitution in production exceeds 1 at high input levels (which always holds if non-land factors do not fully depreciate), unbalanced growth occurs and land becomes overvalued on the long-run trend relative to the fundamental value defined by the present value of land rents. Around the trend, land prices exhibit recurrent stochastic fluctuations, with expansions and contractions in the size of land overvaluation. Keywords : asset price, elasticity of substitution, land, unbalanced growth. JEL codes : D53, G12, O41. |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:cnn:wpaper:23-014e&r=gro |
| By: | Ryoji Ohdoi (Kwansei Gakuin University); Kazuo Mino (Kyoto University); Yunfang Hu (Kobe University) |
| Keywords: | Endogenous growth; Heterogeneous firms; Asymmetric countries; Financial frictions; Country-specific credit crunch |
| JEL: | F12 F43 O16 O41 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:1095&r=gro |
| By: | Ryoji Ohdoi (School of Economics, Kwansei Gakuin University); Kazuo Mino (Kyoto Institute of Economic Research, Kyoto University); Yunfang Hu (Graduate School of Economics, Kobe University) |
| Abstract: | This study constructs a two-country endogenous growth model with heterogeneous firms and asymmetric countries, where the asymmetry lies in the degree of financial frictions. The tradable intermediate goods sector consists of heterogeneous firms and requires specific goods for entry. These goods are produced by heterogeneous entrepreneurs facing credit constraints due to financial frictions. Using this framework, we derive the following results analytically. First, a permanent credit crunch in one country facilitates the exit of intermediate goods firms in that country; meanwhile, it decreases the profitability of exports of the other country’s intermediate goods firms, causing exporters to switch to selling their goods domestically. Second, under no international lending and borrowing, the credit crunch reduces the growth rates of both countries not only in the long run but also during the transition to a new balanced growth path. We also compare the long-run effects under such a financial autarky and financial integration. |
| Keywords: | Banks; Endogenous growth; Heterogeneous firms; Asymmetric countries; Financial frictions; Country-specific credit crunch |
| JEL: | F12 F43 O16 O41 |
| Date: | 2023–08 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:256&r=gro |
| By: | Jonas Loebbing (LMU Munich) |
| Abstract: | What are the implications of (endogenous) directed technical change for the design of redistributive income taxes? I study this question in a Mirrleesian economy augmented to include endogenous technology development and adoption choices by firms. Under certain conditions, any progressive tax reform induces technical change that compresses the pre-tax wage distribution. The key intuition is that progressive tax reforms tend to increase labor supply of less skilled relative to more skilled workers, which induces firms to develop and use technologies that are more complementary to the less skilled. These directed technical change effects make the optimal tax scheme more progressive, raising marginal tax rates at the right tail of the income distribution and lowering them at the left tail. For reasonable calibrations, the impact of directed technical change on the optimal tax is quantitatively important: optimal marginal tax rates are reduced substantially for incomes below the median and increase monotonically over the bulk of the income distribution instead of being U-shaped (as in most of the previous literature). |
| Keywords: | optimal taxation; directed technical change; endogenous technical change; wage inequality; |
| JEL: | H21 H23 H24 J31 O33 |
| Date: | 2023–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:420&r=gro |