nep-gro New Economics Papers
on Economic Growth
Issue of 2014‒06‒07
twelve papers chosen by
Marc Patrick Brag Klemp
Brown University

  1. The Agricultural Origins of Time Preference By Oded Galor; Ömer Özak
  2. Dissecting the Act of God: An Exploration of the Effect of Religion on Economic Activity By Carpantier, Jean-Francois; Litina, Anastasia
  3. Growth, Trade, and Inequality By Gene Grossman; Elhanan Helpman
  4. Informality and Development By Rafael LaPorta; Andrei Shleifer
  6. The Australian growth miracle: An evolutionary macroeconomic explanation By John Foster
  7. Food for Thought: Comparing Estimates of Food Availability in England and Wales, 1700-1914 By Bernard Harris; Roderick Floud; Sok Chul Hong
  8. Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term By Pascal Da Costa
  9. Trust and Innovation in Europe: Causal, spatial and non-linear forces By Semih Akçomak; Hanna Müller-Zick
  10. Institutional quality, macroeconomic stabilization and economic growth: a case study of IMF programme countries By Javed, Omer
  11. What is the linkage between real growth in the Euro area and global financial market conditions ? By Jean-Michel Sahut; Medhi Mili; Frédéric Teulon
  12. Dynamic and Long-term Linkages among Growth, Inequality and Poverty in Developing Countries By Katsushi S. Imai; Raghav Gaiha

  1. By: Oded Galor (Brown University); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the origins of the distribution of time preference across regions. It advances the hypothesis, and establishes empirically, that geographical variations in the incentives to delay consumption in favor of lucrative investment opportunities have had a persistent effect on the distribution of long-term orientation across societies. In particular, exploiting a natural experiment associated with the Columbian Exchange, the research establishes that agro-climatic characteristics in the pre-industrial era that were conducive to higher return to agricultural investment, triggered selection and learning processes that had a persistent positive effect on the prevalence of long-term orientation in the contemporary era.
    Keywords: Time preference, Delayed Gratification, Culture, Agriculture, Economic Development, Evolution
    JEL: O1 Z1
    Date: 2014–05
  2. By: Carpantier, Jean-Francois; Litina, Anastasia
    Abstract: This research establishes that religiosity has a persistent effect on economic outcomes. First we use a sample of migrants in the US to establish that religiosity at the country of origin has a long lasting effect on the religiosity of migrants. Second, exploiting variations in the inherited component of religiosity of migrants, our analysis uncovers the causal effect of religiosity on economic activity using a panel of countries for the period 1935-2000. The empirical findings suggest that i) church attendance has a positive impact on economic outcomes; ii) religious beliefs in the existence of god, hell, heaven and miracles have no systematic effect on economic outcomes, and iii) stronger faith is associated with prosperity. Moreover we extend our analysis to uncover the channels via which religiosity operates. Notably, the positive effect of religious participation and of stronger faith on economic outcomes operates via the creation of social capital and the development of traits, such as hard work and thrift, that are conducive to growth.
    Keywords: Religiosity, Growth, Beliefs, Migration, Culture
    JEL: A1 A13 Z1 Z12
    Date: 2014–05–30
  3. By: Gene Grossman; Elhanan Helpman
  4. By: Rafael LaPorta; Andrei Shleifer
    Abstract: We establish five facts about the informal economy in developing countries.� First, it is huge, reaching about half of the total in the poorest countries.�� Second, it has extremely low productivity compared to the formal economy: informal firms are typically small, inefficient, and run by poorly educated entrepreneurs.�� Third, although avoidance of taxes and regulations is an important reason for informality, the productivity of informal firms is too low for them to thrive in the formal sector.�� Lowering registration costs neither brings many informal firms into the formal sector, nor unleashes economic growth.� Fourth, the informal economy is largely disconnected from the formal economy.�� Informal firms rarely transition to formality, and continue their existence, often for years or even decades, without much growth or improvement.�� Fifth, as countries grow and develop, the informal economy eventually shrinks, and the formal economy comes to dominate economic life. �These five facts are most consistent with dual models of informality and economic development.�
  5. By: Piotr Dominiak (Gdansk University of Technology, Gdansk, Poland); Ewa Lechman (Gdansk University of Technology, Gdansk, Poland); Anna Okonowicz (Gdansk University of Technology, Gdansk, Poland)
    Abstract: The long-run impact of economic growth on total fertility trends is ambiguous and sensitive for in-time variations. Over last decades, economic growth has led in many countries to significant falls in total fertility rates. However, in recent years, in high-income economies a kind of “fertility rebound” is revealed (Goldstein 2009; Luci and Thevenon, 2010; Day 2012). The concept of fertility rebound supports the hypothesis that reversal trends in total fertility rates are mainly attributed to economic growth. The paper unveils the relationship between total fertility rate changes and economic growth in 18 selected countries with fertility rebound observed, over the period 1970-2011. We anticipate uncovering U-shaped impact of economic growth on total fertility rate. To report on the relationship we deploy longitudinal data analysis assuming non-linearity between examined variables. Data applied are exclusive derived from World Development Indicators 2013. Our main findings support the hypothesis on U-shaped relationship between total fertility rate and economic growth in analyzed countries in 1970-2011. Along with the previous we project the threshold level of GDP per capita when the fertility rebound takes place.
    Keywords: fertility rate, fertility rebound, economic growth, panel data analysis.
    JEL: J11 O10 C23
    Date: 2014–05
  6. By: John Foster (School of Economics, The University of Queensland)
    Abstract: The purpose of this article is to understand the drivers of Australian economic growth since its Federation in 1901. Australia is an interesting case study given that it seems not to have been affected by the ‘natural resource curse’ like many other natural resource dependent countries. Indeed, at time of writing, it has been 23 years since it experienced a recession and its GDP per capita is now amongst the very highest in the World. At the end of the 19th Century it also had one of the highest per capita incomes in the World and, although there were economic difficulties between the World Wars, it did not fall into relative economic decline like, for example, Argentina, also a European immigrant country producing and exporting natural resources.
    Date: 2014–05–30
  7. By: Bernard Harris; Roderick Floud; Sok Chul Hong
    Abstract: In The Changing Body (Cambridge University Press and NBER, 2011), the authors presented a series of estimates showing the number of calories available for human consumption in England and Wales at various points in time between 1700 and 1909/13. The current paper corrects an error in those figures but also compares the estimates of The Changing Body with those published by a range of other authors. The differences reflect disagreements over a number of issues, including the amount of land under cultivation, the extraction and wastage rates for cereals and pulses and the number of animals supplying meat and dairy products. The paper considers recent attempts to achieve a compromise between these estimates and challenges claims that there was a dramatic reduction in either food availability or the average height of birth cohorts in the late-eighteenth century.
    JEL: N01 N33 N53 O1 O13 O52
    Date: 2014–05
  8. By: Pascal Da Costa (LGI - Laboratoire Génie Industriel - EA 2606 - Ecole Centrale Paris)
    Abstract: Literature on endogenous growth shows that a polluting economy can grow sustainably and that a double-dividend or win-win effect comprising growth and the environment is possible. Even with a semi- endogenous growth approach, which occur when the knowledge stock yield falls below the unit in the production of innovations, what happens to sustainability and the double dividend? This paper presents the first semi-endogenous growth model with pollution which answers this very question. We first illustrate that the dynamics of this economy can be sustainable even if its long-term growth rate is exogenous. To ensure the latter, a knowledge stock yield that is greater than a certain strictly positive threshold is required. We then demonstrate that the double dividend is impossible since the level of support for innovation no longer has a positive impact on the long-term growth rate. And the environmental policy always has a negative effect on growth.
    Keywords: Innovation; Pollution; Semi-Endogenous Growth; Double Dividend
    Date: 2014–05–22
  9. By: Semih Akçomak (TEKPOL, Science and Technology Policy Studies, Middle East Technical University); Hanna Müller-Zick (Maastricht University)
    Abstract: This paper investigates the effect of trust on innovation. In addition to generalised trust we use a range of other indicators that could measure trust and investigate which trust related variables could explain innovation in 20 European countries divided into 135 regions. We specifically look at causal, non-linear and spatial forces. Our findings indicate that only generalised trust and non-egoistic fairness have robust effects on innovation in Europe. Using historical data on the extent and existence of universities and an instrumental variable strategy we set up a causal relationship between trust and innovation. Even after controlling for causal, spatial and non-linear forces there is a significant direct impact of trust on innovation.
    Keywords: trust, social capital, innovation, EU
    Date: 2013–12
  10. By: Javed, Omer
    Abstract: The current study is motivated by the overall lackluster performance of IMF programmes in recipient countries in terms of economic growth consequences, and tries to explore the relevance of institutional determinants (that have a positively significant role in improving institutional quality in IMF programme countries, in the first place) in enhancing real economic growth in IMF programme countries; as otherwise highlighted by New Institutional Economics literature for countries generally. Moreover, the study also investigates the impact of these determinants through the channel of macroeconomic stability. Based on a time period of 1980-2010 (coinciding with a duration of increasing number of IMF programmes), the results mainly validate that institutional determinants overall play a positive role in reducing macroeconomic instability, and through it, and also independently, enhance real economic growth.
    Keywords: Institutions; IMF programmes
    JEL: B52 F33
    Date: 2014–05–31
  11. By: Jean-Michel Sahut; Medhi Mili; Frédéric Teulon
    Abstract: This paper deals with transition/transmission mechanisms through which world financial market conditions indicators affect real economic growth in the Euro area. The informational content of financial variables for predicting real economic growth is assessed, allowing for asymmetric responses to shocks. A nonlinear framework is developed based on a smooth transition model for which the effects of shocks can vary across business cycles when financial indicators modify both the endogenous and state variables. Global financial variables are shown to significantly affect real economic growth in the Euro area.
    Keywords: Euro area, economic growth, financial markets.
    Date: 2014–06–02
  12. By: Katsushi S. Imai; Raghav Gaiha
    Date: 2014

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