nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒08‒20
four papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Debt and economic growth in the European Union: what causes what? By Cândida Ferreira
  2. Update on economic and fiscal conditions in Puerto Rico By Dudley, William
  3. The Political Intergenerational Welfare State By Bishnu, Monisankar; Wang, Min
  4. Global Population Growth, Technology and Malthusian Constraints: A Quantitative Growth Theoretic Perspective By Bruno Lanz; Simon Dietz; Tim Swanson

  1. By: Cândida Ferreira
    Abstract: This paper contributes to the empirical investigation of the causality relations between real GDP growth and the growth of three debt categories, namely public, foreign and private debt, in the universe of the 28 European Union countries during the past decade. By using panel Granger causality estimations, we find nonstatistically significant causality between foreign debt and economic growth and the limited importance of the causality between private debt and real GDP growth. On the contrary, the results obtained show statistically relevant bidirectional causality relations between public debt and economic growth, and this is true before and after the outbreak of the recent financial crisis. Moreover, there is clear evidence of economic growth’s contribution to the decrease in public debt.
    Date: 2014–05
  2. By: Dudley, William (Federal Reserve Bank of New York)
    Abstract: Remarks to the Association of Certified Public Accountants of Puerto Rico, San Juan, Puerto Rico.
    Keywords: Commonwealth government; economic growth; public debt; public corporations
    JEL: E2
    Date: 2014–06–24
  3. By: Bishnu, Monisankar; Wang, Min
    Abstract: This paper characterizes an intergenerational welfare state with endogenous education and pension choice under general equilibrium-probabilistic voting. We show that politically implementing public education program always increases the future human capital, but this higher future human capital would not help support a more generous social security in the future. The effect of implementing PAYG social security on education however crucially depends on the sources of funding for education investment. Establishing PAYG pension program depresses investment in public education. However if the source of funding for education investment is private, in both the cases when pension is the only instrument or when public pension and public education are implemented together as a package, there can be an improvement in education investment if and only if the political influence of the old is limited and so the size of the PAYG social security is small. A substantially thick pension scheme which results from a heavy influence of the old in the political process spoils the mutual benefits.
    Keywords: education; Markov perfect equilibrium; Pension; Probabilistic voting; Endogenous growth
    JEL: D90 E6 H3 H52 H55
    Date: 2014–08–01
  4. By: Bruno Lanz; Simon Dietz; Tim Swanson (Centre for International Environmental Studies, The Graduate Institute of International and Development Studies, Geneva)
    Abstract: We study the interactions between global population, technological progress, per capita income, the demand for food, and agricultural land expansion over the period 1960 to 2100. We formulate a two-sector Schumpeterian growth model with a Barro-Becker representation of endogenous fertility. A manufacturing sector provides a consumption good and an agricultural sector provides food to sustain contemporaneous population. Total land area available for agricultural production is finite, and the marginal cost of agricultural land conversion is increasing with the amount of land already converted, creating a potential constraint to population growth. Using 1960 to 2010 data on world population, GDP, total factor productivity growth and crop land area, we structurally estimate the parameters determining the cost of fertility, technological progress and land conversion. The model closely fits observed trajectories, and we employ the model to make projections from 2010 to 2100. Our results suggest a population slightly below 10 billion by 2050, further growing to 12 billion by 2100. As population and per capita income grow, the demand for agricultural output increases by almost 70% in 2050 relative to 2010. However, agricultural land area stabilizes by 2050 at roughly 10 percent above the 2010 level: growth in agricultural output mainly relies on technological progress and capital accumulation.
    Keywords: Economic growth; Population projections; Technological progress; Endogenous fertility; Endogenous innovations; Land conversion; Food security
    JEL: O11 O13 J11 C53 C61 Q15 Q24
    Date: 2014–06–01

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