nep-dev New Economics Papers
on Development
Issue of 2005‒02‒27
ten papers chosen by
Jeong-Joon Lee
Towson University

  1. Perfectly Competitive Innovation (Growth) By Michele Boldrin; David K Levine
  2. Competition and Growth in a Vintage Knowledge Model By Peter Funk
  3. Inflation and Innovation-driven Growth By Peter Funk; Bettina Kromen
  4. Financial Liberalization in Latin-America in the 1990s: A Reassessment By Joshua Aizenman
  5. Fertility and Social Security By Michele Boldrin; Mariacristina De Nardi; Larry E. Jones
  6. Endogenous Public Policy and Long-Run Growth: Some Simple Analytics By Christos Koulovatianos; Leonard J. Mirman
  7. Why doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation By Sebnem Kalemli-Ozcan; Laura Alfaro; Vadym Volosovych
  8. High Corruption Income in Ming and Qing China By Shawn Ni; Pham Hoang Van
  9. Cultural Attitudes and Economic Development: arguments for a pluralist political economy of development By Manuel Couret Branco
  10. Colonisation, School and Development in Africa. An empirical analysis By Denis Cogneau

  1. By: Michele Boldrin; David K Levine
    Date: 2005–02–22
  2. By: Peter Funk
    Abstract: This paper models the relationship between growth, technology-lifetime, entry, and competition in a vintage-knowledge model of endogenous growth and perfect competition. The model has a unique steady state REE equilibrium. Variations of R&D-efficiency lead to a negative relation between growth and vintage-lifetime and indicate a non-monotonic relation between growth and competition. A shift of population size and its growth rates have qualitatively different consequences here than in standard models. The extent of entry constitutes a buffer, neutralizing the effect of population size or population growth rates on per-capita income levels and growth rates.
    Keywords: Endogenous Growth, Vintage-Model, Perfect Competition
    JEL: D40 D90 O30 O40
    Date: 2005–01–30
  3. By: Peter Funk; Bettina Kromen
    Abstract: This paper models the relationship between inflation and steady state growth in a model combining standard Schumpeterian growth with a standard New Keynesian specification of nominal price rigidity. Positive money growth has two clear-cut countervailing effects on the incentive to innovate. Past price rigidity causes the use of an inefficiently large quantity of cheap old intermediate goods, reducing demand for new ones and hence, the incentive to innovate. Future price rigidity erodes the new good’s relative price, increasing demand and therefore the current incentive to innovate. In numerical calibrations the negative effect of inflation on growth dominates.
    Keywords: Inflation, endogenous growth, price rigidity
    JEL: E31 O30 O42
    Date: 2005–02–15
  4. By: Joshua Aizenman
    Abstract: This paper studies the experience of Latin-America [LATAM] with financial liberalization in the 1990s. The rush towards financial liberalizations in the early 1990s was associated with expectations that external financing would alleviate the scarcity of saving in LATAM, thereby increasing investment and growth. Yet, the data and several case studies suggest that the gains from external financing are overrated. The bottleneck inhibiting economic growth is less the scarcity of saving, and more the scarcity of good governance. A possible interpretation for these findings is that in countries where private savings and investments were taxed in an arbitrary and unpredictable way, the credibility of a new regime could not be assumed or imposed. Instead, credibility must be acquired as an outcome of a learning process. Consequently, increasing the saving and investment rates tends to be a time consuming process. This also suggests that greater political instability and polarization would induce consumers to be more cautious in increasing their saving and investment rates following a reform. Hence, reaching a sustained take-off in Latin-America is a harder task to accomplish than in Asia.
    JEL: F21 F23 F36 F43
    Date: 2005–02
  5. By: Michele Boldrin; Mariacristina De Nardi; Larry E. Jones
    Abstract: The data show that an increase in government provided old-age pensions is strongly correlated with a reduction in fertility. What type of model is consistent with this finding? We explore this question using two models of fertility, the one by Barro and Becker (1989), and the one inspired by Caldwell and developed by Boldrin and Jones (2002). In the Barro and Becker model parents have children because they perceive their children's lives as a continuation of their own. In the Boldrin and Jones' framework parents procreate because the children care about their old parents' utility, and thus provide them with old age transfers. The effect of increases in government provided pensions on fertility in the Barro and Becker model is very small, and inconsistent with the empirical findings. The effect on fertility in the Boldrin and Jones model is sizeable and accounts for between 55 and 65% of the observed Europe-US fertility differences both across countries and across time and over 80% of the observed variation seen in a broad cross-section of countries. Another key factor affecting fertility the Boldrin and Jones model is the access to capital markets, which can account for the other half of the observed change in fertility in developed countries over the last 70 years.
    JEL: E10 J10 J13 O10
    Date: 2005–02
  6. By: Christos Koulovatianos; Leonard J. Mirman
    Abstract: We study the determinants of voting outcomes on the provision of public consumption through marginal income taxes in the context of the simple linear growth model. We provide analytical results on how the dynamic politicoeconomic equilibrium maps the economic fundamentals to policies and long-run growth. We find that in a deterministic growth environment voters internalize, although imperfectly, the deadweight losses of taxation and vote for lower taxes when the productivity of capital is higher. Therefore, the politicoeconomic channel reinforces the positive role of productivity for growth. In a stochastic linear-growth environment where business cycles are driven by productivity shocks, in line with existing evidence, we find that the level of endogenous public consumption is procyclical but its share of GDP is countercyclical.
    JEL: C73 D72 E61 E62 O23
    Date: 2005–01
  7. By: Sebnem Kalemli-Ozcan (Department of Economics, University of Houston); Laura Alfaro (Department of Economics, Harvard Business School); Vadym Volosovych (Department of Economics, University of Houston)
    Abstract: We examine the role of different explanations for the lack of flows of capital from rich to poor countries—the “Lucas paradox”—in an empirical framework. Broadly speaking, the theoretical explanations for this paradox include differences in fundamentals affecting the production structure versus international capital market imperfections. Our cross-country regressions show that, for the period 1971-1998, institutional quality is the most important causal variable explaining the “Lucas paradox”. Human capital and asymmetric information play a role as determinants of capital inflows but these variables cannot fully account for the paradox.
    Keywords: capital inflows, fundamentals, institutions, international capital market imperfections, neoclassical model
    JEL: F21 F41 O1
    Date: 2003–12
  8. By: Shawn Ni (Department of Economics, University of Missouri-Columbia); Pham Hoang Van (Department of Economics, University of Missouri-Columbia)
    Abstract: We develop an economic model that explains historical data on government corruption in Ming and Qing China. In our model, officials’ extensive powers result in corrupt income matching land’s share in output. We estimate corrupt income to be between 14 to 22 times official income resulting in about 22% of agricultural output accruing to 0.4% of the population. The results suggest that eliminating corruption through salary reform was possible in early Ming but impossible by mid-Qing rule. Land reform may also be ineffective because officials could extract the same rents regardless of ownership. High officials’ incomes and the resulting inequality may have also created distortions and barriers to change that could have contributed to China’s stagnation over the five centuries 1400-1900s.
    Keywords: Corruption, China
    JEL: O10 O53
    Date: 2005–02–18
  9. By: Manuel Couret Branco (Department of Economics, University of Évora)
    Date: 2005
  10. By: Denis Cogneau (DIAL, IRD, Paris)
    Abstract: Macroeconomic data on 45 countries are combined with microeconomic data on 4 case-study countries to reveal significant differences in the levels of education attained under the different colonial powers in Africa during the colonial period. In 1960, former British colonies exhibited higher educational performance. These differences are robust to the control of some pre-colonial factors and have persisted over time until 1990. However, the education differential did not give rise to either income per capita or life expectancy differentials. Urbanisation occurred at a faster rate in the former French colonies. Microeconomic data for the case-study countries show indeed that private returns to education tend to be lower in the former British colonies. _________________________________ En combinant des données macro-économiques sur 45 pays et des données micro-économiques sur 4 pays comparables, nous révélons l’existence de différences entre les niveaux d’éducation atteints en Afrique selon l’identité du colonisateur. En 1960, les ex-colonies britanniques affichaient une performance éducative supérieure. Ces différences sont robustes au contrôle de certains facteurs pré-coloniaux et ont persisté dans le temps jusqu’en 1990. Cependant, le différentiel d’éducation ne s’est pas transformé en différences de revenu ou d’espérance de vie. Les ex-colonies françaises se sont urbanisées plus rapidement. Les données microéconomiques sur les pays d’étude montrent bien que les rendements privés de l’éducation tendent à être moins élevés dans les ex-colonies britanniques.
    Keywords: Colonization, School, Development, Growth, Africa, Colonisation, Ecole, Développement, Croissance, Afrique.
    JEL: N37 O40 P51
    Date: 2003–03

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