nep-gro New Economics Papers
on Economic Growth
Issue of 2014‒12‒29
28 papers chosen by
Marc Klemp
Brown University

  1. On the Ethnic Origins of African Development: Chiefs and Pre-colonial Political Centralization By Michalopoulos, Stelios; Papaioannou, Elias
  2. Culture: Persistence and Evolution By Giavazzi, Francesco; Petkov, Ivan; Schiantarelli, Fabio
  3. The Geography of Development within Countries By Desmet, Klaus; Henderson, J Vernon
  4. Immigrant Fertility in Germany: The Role of Culture By Kamila Cygan-Rehm
  5. Further Evidence on the Link between Pre-Colonial Political Centralization and Comparative Economic Development in Africa By Michalopoulos, Stelios; Papaioannou, Elias
  6. Shipping around the Malthusian trap By Grimm, Michael; Wetta, Claude; Nikiema, Aude
  7. Impoverished, but Numerate? Early Numeracy in East Asia (1550–1800) and its Impact on 20th and 21st Century Economic Growth By Baten, Jörg; Sohn, Kitae
  8. Does History Fully Determine the Spatial Distribution of Human Capital ? By Henri Busson
  9. Quakers, coercion and pre-modern growth: why friends’ formal institutions for contract enforcement did not matter for early Atlantic trade expansion By Esther Sahle
  10. Transition to Clean Technology By Daron Acemoglu; Ufuk Akcigit; Douglas Hanley; William Kerr
  11. The Effect of Population Aging on Economic Growth By Nicole Maestas; Kathleen Mullen; David Powell
  12. Transitional Dynamics in an R&D-based Growth Model with Natural Resources. By Thanh Le; Cuong Le Van
  13. Estimating the human capital stock for Cape Verde, 1950-2012 By Silves J.C. Moreira; Pedro Cosme Vieira; Aurora A.C. Teixeira
  14. Micro and macro policies in the Keynes + Schumpeter evolutionary models By Giovanni Dosi; Mauro Napoletano; Andrea Roventini; Tania Treibich
  15. The tradeoff between fertility and education: Evidence from the Korean development path By Jun, Bogang; Lee, Joongho
  16. Transfers and Transformations: Remittances, Foreign Aid, and Growth By Jonathan Temple; Huikang Ying; Patrick Carter
  17. Family Structure and the Education Gender Gap: Evidence from Italian Provinces By Bertocchi, Graziella; Bozzano, Monica
  18. Decreasing Return of Intra-industry R&D and Economic Growth By Liu, Haiyang
  19. Fertility Decline and Missing Women By Jayachandran, Seema
  20. Agricultural Employment, Wages and Poverty in Developing Countries By Katsushi S. Imai; Raghav Gaiha; Constanza Di Nucci
  21. Growth and Unemployment in the Presence of Trend Inflation By Mewael F. Tesfaselassie
  22. Bubbles and unemployment in an endogenous growth model By Ken-ichi Hashimoto; Ryonfun Im
  23. Growth, Slowdowns, and Recoveries By Francesco Bianchi; Howard Kung
  24. Optimum Growth and Carbon Policies with Lags in the Climate System By Lucas Bretschger; Christos Karydas
  25. Economic growth, human capital and structural change: an empirical analysis By Anabela Queirós; Aurora A.C. Teixeira
  26. The “C†in ICT: communications capital, spillovers and UK growth By Goodridge, PR; Haskel, J; Wallis, G
  27. Gender, Time-Use, and Fertility Recovery in Industrialized Countries By García-Manglano, Javier; Nollenberger, Natalia; Sevilla, Almudena
  28. Relationship between Remittance, Export, Foreign Direct Investment and Growth: A Panel Cointegration and Causal Analysis in South Asia By Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Abbasi, Faiza; Zakaria, Muhammad

  1. By: Michalopoulos, Stelios; Papaioannou, Elias
    Abstract: We report on recent findings of a fruitful research agenda that explores the importance of ethnic-specific traits in shaping African development. First, using recent surveys from Sub-Saharan African countries, we document that individuals identify with their ethnic group as often as with the nation pointing to the salience of ethnicity. Second, we focus on the various historical and contemporary functions of tribal leaders (chiefs) and illustrate their influence on various aspects of the economy and the polity. Third, we elaborate on a prominent dimension of ethnicity, that of the degree of complexity of pre-colonial political organization. Building on insights from the African historiography, we review recent works showing a strong association between pre-colonial centralization and contemporary comparative development both across and within countries. We also document that the strong link between pre-colonial political centralization and regional development -as captured by satellite images of light density at night- is particularly strong in areas outside the vicinity of the capitals, where due to population mixing and the salience of national institutions ethnic traits play a lesser role. Overall, our evidence is supportive to theories and narratives on the presence of a "dual" economic and institutional environment in Africa.
    Keywords: Africa; development; ethnicity; institutions; state capacity
    JEL: O10 O40 O43
    Date: 2014–11
  2. By: Giavazzi, Francesco; Petkov, Ivan; Schiantarelli, Fabio
    Abstract: This paper presents evidence on the speed of evolution (or lack thereof) of a wide range of values and beliefs of different generations of European immigrants to the US. The main result is that persistence differs greatly across cultural attitudes. Some, for instance deep personal religious values, some family and moral values, and political orientation converge very slowly to the prevailing US norm. Other, such as attitudes toward cooperation, redistribution, effort, children's independence, premarital sex, and even the frequency of religious practice or the intensity of association with one's religion, converge rather quickly. The results obtained studying higher generation immigrants differ greatly from those found when the analysis is limited to the second generation, as typically done in the literature, and they imply a lesser degree of persistence than previously thought. Finally, we show that persistence is “culture specific" in the sense that the country from which one's ancestors came matters for the pattern of generational convergence.
    Keywords: beliefs; culture; evolution; immigration; integration; persistence; transmission; values
    JEL: A13 F22 J00 J61 Z1
    Date: 2014–06
  3. By: Desmet, Klaus; Henderson, J Vernon
    Abstract: This chapter describes how the spatial distribution of economic activity changes as economies develop and grow. We start with the relation between development and rural-urban migration. Moving beyond the coarse rural-urban distinction, we then focus on the continuum of locations in an economy and describe how the patterns of convergence and divergence change with development. As we discuss, these spatial dynamics often mask important differences across sectors. We then turn our attention to the right tail of the distribution, the urban sector. We analyze how the urban hierarchy has changed over time in developed countries and more recently in developing countries. The chapter reviews both the empirical evidence and the theoretical models that can account for what we observe in the data. When discussing the stylized facts on geography and development, we draw on empirical evidence from both the historical evolution of today's developed economies and comparisons between today's developed and developing economies.
    Keywords: developed countries; developing countries; development; economic geography; growth; space; urban economics
    JEL: O1 O18 R1 R11 R12
    Date: 2014–09
  4. By: Kamila Cygan-Rehm
    Abstract: This paper focuses on the role of home country’s fertility culture in shaping immigrants’ fertility. I use the German Socio-Economic Panel (SOEP) to study completed fertility of first-generation immigrants who arrived from different countries and in different years. The variation in total fertility rates (TFRs) across countries and over time serves as a proxy for cultural changes. By using a linear fixed-effects approach, I find that women from countries with high TFRs have significantly more children than women from countries with low TFRs. I also demonstrate that this positive relationship is attenuated by potential selection that operates towards the destination country. In addition, home country’s TFRs explain a large proportion of fertility differentials between immigrants and German natives. The results suggest that home country’s culture affects immigrants’ long-run outcomes, thereby supporting the socialization hypothesis.
    Keywords: migration, fertility, socialization, culture, Germany
    JEL: J13 J15 Z10 Z13
    Date: 2014
  5. By: Michalopoulos, Stelios; Papaioannou, Elias
    Abstract: We examine the link between pre-colonial statehood and contemporary regional African development, as reflected in satellite images on light density at night. We employ a variety of historical maps to capture the former. Our within-country analysis reveals a strong positive correlation between pre-colonial political centralization and contemporary development (and urbanization). If anything, the association strengthens when we account for measurement error on the historical maps of pre-colonial political organization.
    Keywords: Africa; development; ethnicity; institutions; state capacity
    JEL: O10 O40 O43
    Date: 2014–11
  6. By: Grimm, Michael; Wetta, Claude; Nikiema, Aude
    Abstract: Burkina Faso has experienced quite significant aggregate growth over the past two decades, but that growth has not been transformed into poverty reduction. The key obstacles preventing large-scale escape from poverty are very high population growth combin
    Keywords: Burkina Faso, food crisis, inequality, poverty, Malthusian Trap, structural change
    Date: 2014
  7. By: Baten, Jörg; Sohn, Kitae
    Abstract: This paper first draws on a unique data set, hojok (household registers), to estimate numeracy levels in Korea from the period 1550–1630. We add evidence from Japan and China from the early modern period until 1800 to obtain a human capital estimate for East Asia. We find that numeracy was high by global standards, even considering the potential sources of upward bias inherent in the data. Therefore, the unusually high level of numeracy in East Asia in the early 21st century was already present in the early modern period. However, East Asia had low national income levels during the 19th and early 20th centuries. We assess this phenomenon in the last section and find that “Impoverished Numerates”, i.e., countries that were poor despite high early numerical human capital formation, had substantially higher growth rates during the late 20th and early 21st centuries.
    Keywords: China; Development; Growth; Human-Capital; Japan; Korea; Numeracy
    JEL: I21 N30 N35 O15 O40
    Date: 2014–05
  8. By: Henri Busson
    Abstract: In the United States, regions with more human capital tend to attract skilled workers (e.g., see Glaeser and Berry, 2005), and as a result, convergence between regions does not occur (e.g., see Barro and Sala-i-Martin, 1992). Presently, many of the most productive European workers try to migrate to the United States. As a consequence, economic growth in Europe could be affected by such migrations (e.g., see G Saint Paul, 2008). Futhermore, Indian and Chinese entrepreneurs are recently coming back to their home countries despite higher wages in the United States. The main explanations are the lack of economic opportunities in the US and the costs of the labour force (e.g., see Saxenian et al., 2011). To comprehend these problems, we develop a theoretical Economic Geography model with heterogeneous skills for workers. It is an extension of Krugman's famous model "History versus expectations". This two regions model describes an economy with one input assuming two levels of skills for labor force, where workers have the opportunity to migrate. The question is whether history completely determines the final equilibrium or whether is it possible to attract skilled workers to areas with less human capital. This is a dynamic model, which is able to explain the location choices of workers between countries or within countries. The model could be extended to more complex new economic geography model with utility functions instead of wages (e.g., see Ottaviano, Tabuchi and Thisse, 2002). With the heterogeneity of workers, several equilibriums appear that were not present in Krugman's model. Dispersion of human capital is now a possibility where all the skilled workers are located in one area and all the unskilled workers are in the other region. Our results suggest that history does not determine the final outcome even with high interest rates conditional on economies scales that are sufficiently high contrary to Krugman. At least one equilibrium path emerges that was not present in Krugman's model. Under certain conditions, the final equilibrium is stable. This finding contradicts previous papers, which demonstrated that heterogeneity was a stabilizing force (e.g., see Morris and Shin, 2006; Herrendorf et al., 2000).
    Keywords: Economic geography; location choice; equilibrium paths; linear differential systems
    JEL: J61 C62 R12
    Date: 2014–11
  9. By: Esther Sahle
    Abstract: During the late seventeenth century the Atlantic trade experienced unprecedented growth. The New Institutional Economists attribute this to the emergence of new institutions for property rights enforcement. During this period, Quakers emerged as the region’s most prominent trading community. This paper constitutes the first study of the London Quaker community. In contrast to the literature, claiming that they enjoyed a competitive advantage due to their church’s formal institutions for contract enforcement, this paper argues that Friends’ formal institutions for contract enforcement emerged only after 1750. This constituted a response to contemporary concern about debt.
    Keywords: institutions; Quakers; early modern trade; merchants; religion; Atlantic
    JEL: Z12
    Date: 2014–11
  10. By: Daron Acemoglu (Department of Economics, MIT and CIFAR); Ufuk Akcigit (Department of Economics, University of Pennsylvania); Douglas Hanley (Department of Economics, University of Pittsburgh); William Kerr (Harvard Business School, Harvard University)
    Abstract: We develop a microeconomic model of endogenous growth where clean and dirty technologies complete in production and innovation - in the sense that research can be directed to either clean or dirty technologies. If dirty technologies are more advanced to start with, the potential transition to clean technology can be difficult both because clean research must climb several rungs to catch up withdirty technology and because this gap discourages research effort directed towards clean technologies. Carbon taxes and research subsidies may nonetheless encourage production and innovation in clean technologies, though the transition will typically be slow. We characterize certain general properties of the transition path from dirty to clean technology. We then estimate the model using a combination of regression analysis on the relationship between R&D and patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the US energy sector. The model’s quantitative implications match a range of moments not targeted in the estimation quite well. We then characterize the optimal policy path implied by the model and our estimates. Optimal policy makes heavy use of research subsidies as well as carbon taxes. We use the model to evaluate the welfare consequences of a range of alternative policies.
    Keywords: carbon cycle, directed technological change, environment, innovation, optimal policy
    JEL: O30 O31 O33 C65
    Date: 2014–12–03
  11. By: Nicole Maestas (RAND Economics); Kathleen Mullen (RAND Economics); David Powell (RAND Economics)
    Abstract: Population aging is widely expected to have detrimental effects on aggregate economic growth. However, we have little empirical evidence about the actual existence or magnitude of such effects. In this paper, we exploit differential aging patterns at the state level in the United States between 1980 and 2010. Many states have already experienced high growth rates of the 60+ population, comparable to the predicted national growth rate over the next several decades. Furthermore, these differential growth rates occur partially for reasons unrelated to economic growth, providing a natural approach to isolate the impact of aging on growth. We predict the magnitude of population aging at the state-level given the state’s age structure in an initial period and exploit this predictable differential growth to estimate the impact of population aging on Gross Domestic Product (GDP) growth, and its constituent parts, labor force and productivity growth. We estimate that a 10% increase in the fraction of the population ages 60+ decreases GDP per capita by 5.7%. We find that this reduction in economic growth caused by population aging is primarily due to a decrease in growth in the supply of labor. To a lesser extent, it is also due to a reduction in productivity growth. We present evidence of ownward adjustment of earnings growth to reflect the reduction in productivity.
    Keywords: population aging, GDP growth, demographic transitions
    JEL: J11 J14 J23 J26 O47
    Date: 2014–11
  12. By: Thanh Le (University of Queensland); Cuong Le Van (Centre d'Economie de la Sorbonne - Paris School of Economics, IPAG and VCREME)
    Abstract: Upon introducing natural resources, both renewable and non-renewable, into an endogenous growth framework with R&D, this paper derives the transitional dynamics of an economy towards its long-run equilibrium. Using the Euler - Lagrange framework, this paper has succesfully figured out the optimal paths of the economy. It then shows the existence and uniqueness of a balanced growth path for each type of resources. The steady state is shown to be of a saddle point stability. Along the balanced growth path, it is found that a finite size resource sector coexists with other continuously growing sectors. The paper then examines long-run responses of the economy to various changes pertaining to innovative production condition, resource sector parameters as well as rate of time preference. It also shows that positive long-run growth will be sustained regardless the type of resources used.
    Keywords: R&D-based growth, natural resources, vertical innovation, transitional dynamics.
    JEL: O13 O31 O41
    Date: 2014–10
  13. By: Silves J.C. Moreira (Faculdade de Economia, Universidade do Porto); Pedro Cosme Vieira (Faculdade de Economia, Universidade do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC TEC; OBEGEF)
    Abstract: Despite the importance of human capital stock to the economic growth of countries, its analysis has been restricted to more developed countries or to cross-country samples from a set of countries. Due to a lack of estimates for this variable in less developed countries, it has not been possible to assess the importance of this determinant for their growth and development. The aim of this study is to partly fill this gap, determining human capital stock in terms of average formal schooling for the Cape Verdean economy in the period 1950-2012. To this end, we resorted to an adaption of the methodology proposed by Barro and Lee (1993), based on past schooling values. We found that between 1950 and 2012 the Cape Verdean working-age population showed a gradual improvement in the levels of schooling, rising from 0.7 years of schooling in the 1950s to 5.4 in late 2012. However, this means that, in each year, the average years of schooling increased only 0.08 years, meaning that, in net terms and on average, only 7.6% of the working-age population was attending some level of formal education. The availability of a time series of number of average schooling years in Cape Verde opens up possibilities for assessing the impact of human capital on the country’s economic growth.
    Keywords: Human capital, measurement, economic growth, Cape Verde
    JEL: J24 I20 C19 O40
    Date: 2014–11
  14. By: Giovanni Dosi (Laboratory of Economics and Management); Mauro Napoletano (OFCE); Andrea Roventini (Department of economics); Tania Treibich (Maastricht University)
    Abstract: This paper presents the family of the Keynes+Schumpeter (K+S, cf. Dosi et al, 2010, 2013, 2014) evolutionary agent-based models, which study the effects of a rich ensemble of innovation, industrial dynamics and macroeconomic policies on the long-term growth and short-run fluctuations of the economy. The K+S models embed the Schumpeterian growth paradigm into a complex system of imperfect coordination among heterogeneous interacting firms and banks, where Keynesian (demand-related) and Minskian (credit cycle) elements feed back into the meso and macro dynamics. The model is able to endogenously generate long-run growth together with business cycles and major crises. Moreover, it reproduces a long list of macroeconomic and microeconomic stylized facts. Here, we discuss a series of experiments on the role of policies affecting i) innovation, ii) industry dynamics, iii) demand and iv) income distribution. Our results suggest the presence of strong complementarities between Schumpeterian (technological) and Keynesian (demand-related) policies in ensuring that the economic system follows a path of sustained stable growth and employment
    Keywords: agent-based model; Fiscal policy; Economic crises; Austerity policies; Disequilibrium dynamics
    JEL: C63 E32 E52 G21 O4 E6
    Date: 2014–11
  15. By: Jun, Bogang; Lee, Joongho
    Abstract: Unified Growth Theory suggests the demographic transition and the associated rise in human capital formation were critical forces in the transition from Malthusian stagnation to modern economic growth. This paper provides empirical evidence in support of this hypothesis based on the Korean industrialization in the late 20th century. Using a fixed effects model and a fixed effect two-stage least squares model, this study exploits variations in fertility and in human capital formation across regions in Korea over the period 1970 to 2010. This analysis finds a virtuous cycle, where technological progress increased the demand for human capital, leading to an increase in the level of education and, in turn, to a demographic transition. This establishes the existence of a quantity-quality tradeoff on the Korean development path.
    Keywords: Demographic transition,Quantity-quality trade-off,Malthusian stagnation,Unified Growth Theory
    JEL: I25 J13 N15
    Date: 2014
  16. By: Jonathan Temple; Huikang Ying; Patrick Carter
    Abstract: For many developing countries, international transfers are now a significant source of income. These transfers include official development aid, private charitable donations, and personal remittances. This paper uses dynamic one-sector and multi-sector models to isolate conditions under which transfers could promote growth and structural transformation. Although transfers bring welfare benefits, the effects on investment and growth are modest under isoelastic utility; where investment is profitable, it would be undertaken even in the absence of transfers. Larger effects on growth and sectoral structure emerge when preferences take the Stone-Geary form, since then low investment can co-exist with high returns to investment.
    Keywords: foreign aid, remittances, cash transfers, economic growth, structural transformation.
    JEL: F24 F35 O41
    Date: 2014–11–28
  17. By: Bertocchi, Graziella; Bozzano, Monica
    Abstract: We investigate the determinants of the education gender gap in Italy in historical perspective with a focus on the influence of family structure. We capture the latter with two indicators: residential habits (nuclear vs. complex families) and inheritance rules (partition vs. primogeniture). After controlling for economic, institutional, religious, and cultural factors, we find that over the 1861-1901 period family structure is a driver of the education gender gap, with a higher female to male enrollment rate ratio in upper primary schools being associated with nuclear residential habits and equal partition of inheritance. We also find that only the effect of inheritance rules persists over the 1971-2001 period.
    Keywords: convergence; education gender gap; family types; inheritance; institutions; Italian Unification; religion
    JEL: E02 H75 I25 J16 N33 O15
    Date: 2014–08
  18. By: Liu, Haiyang
    Abstract: This paper presents a growth model with decreasing returns of intra-industry research and development. With the old industries fade away, more and more researchers come out to create new industries. This means growth can keep constant, stagnancy can breed prosperity, and it can also explain business cycle, structural change, the rise and fall of national economy, and the importance of freedom market which allowing abound trial and error to seek new growth engine.
    Keywords: Economic Growth, Decreasing Return, Research and Development
    JEL: E32 O4
    Date: 2014–01–03
  19. By: Jayachandran, Seema
    Abstract: India's male-biased sex ratio has worsened over the past several decades. In combination with the increased availability of prenatal sex-diagnostic technology, the declining fertility rate is a hypothesized factor. Suppose a couple strongly wants to have at least one son. At the natural sex ratio, they are less likely to have a son the fewer children they have, so a smaller desired family size will increase the likelihood they manipulate the sex composition of their children. This paper empirically measures the relationship between desired fertility and the sex ratio. Standard survey questions on fertility preferences ask the respondent her desired number of children of each sex, but people who want larger families have systematically stronger son preference, which generates bias. This paper instead elicits desired sex composition at specified, randomly determined, levels of total fertility. These data allow one to isolate the causal effect of family size on the desired sex ratio. I find that the desired sex ratio increases sharply as the fertility rate falls; fertility decline can explain roughly half of the increase in the sex ratio that has occurred in India over the past thirty years. In addition, factors such as female education that lead to more progressive attitudes could counterintuitively cause a more male-skewed sex ratio because while they reduce the desired sex ratio at any given family size, they also reduce desired family size.
    Keywords: desired fertility; sex selection; son preference
    JEL: J13 O12 O15
    Date: 2014–06
  20. By: Katsushi S. Imai; Raghav Gaiha; Constanza Di Nucci
    Abstract: Abstract Drawing upon panel data estimations, we have analysed the relationships among agricultural productivity, employment, technology, openness of the economy, inequality in land distribution and poverty. First, we have identified a number of important factors affecting agricultural productivity, such as agricultural R&D expenditure, irrigation, fertilizer use, agricultural tractor/machinery use, reduction in inequality of land distributions, or reduction in gender inequality. Second, while agricultural wage rate is negatively associated with agricultural productivity and food price in levels, the growth in agricultural wage rate is positively correlated with the growth in agricultural land or labour productivity as well as with the growth in food price, particularly after 2000. Contrary to the ILO’s (2012) claim that the gap has widened recently, this suggests the narrowing gap between wage and labour productivity once we focus on the conditional relationship between the two. Third, agricultural employment per hectare tends to increase agricultural productivity after taking account of the endogeneity of the former, while the growth in agricultural employment per hectare tends to increase the growth in non-agricultural employment over time with adjustment for endogeneity of the former. In this context, we have reviewed the recent literature and emphasised the importance of enhancing agricultural productivity and employment. Fourth, both agricultural growth and non-agricultural growth tend to lead to reduction in overall inequality. Finally, increase in agricultural productivity which is treated as endogenous will reduce poverty significantly through the overall economic growth. Overall, policies to increase agricultural productivity and agricultural employment are likely to increase non-agricultural growth, overall growth and reduce poverty, where guaranteeing gender inequality is likely to be one of the key factors.
    Date: 2014
  21. By: Mewael F. Tesfaselassie
    Abstract: The standard search model of unemployment predicts, under plausible assumptions about household preferences, that disembodied technological progress leads to higher unemployment. This prediction is at odds with the experience of industrialized countries in the 1970s. This paper shows that augmenting the model with nominal price rigidity goes towards reconciling the model's prediction. In the presence of nominal price rigidity faster growth is shown to lead to lower unemployment if the rate of inflation is relatively high, as was the case in the 1970s. In general, the effect of growth on unemployment is shown to be non-monotonic. There is a threshold level of inflation below (above) which faster growth leads to higher (lower) unemployment
    Keywords: growth, trend inflation, unemployment
    JEL: E24 E31
    Date: 2014–11
  22. By: Ken-ichi Hashimoto (Graduate School of Economics, Kobe University); Ryonfun Im (Graduate School of Economics, Kobe University)
    Abstract: We construct a continuous-time overlapping-generations model with labor market friction in order to examine the relationship between bubbles, economic growth, and unemployment. We show that the existence of bubbles is contingent upon the equilibrium unemployment rate. Asset bubbles can (not) exist when unemployment is low (high), which leads to higher (lower) interest rates and economic growth through labor market efficiency. Hence, economic growth under the bubble regime where bubbles can exist is higher than that under the non-bubble regime where bubbles cannot exist. Furthermore, policy or parameter changes that have a positive effect on the labor market shift the economy from a non-bubble regime to a bubble regime.
    Keywords: overlapping generations, endogenous growth, labor market friction, unemployment
    JEL: J64 O41 O42
    Date: 2014–12
  23. By: Francesco Bianchi; Howard Kung
    Abstract: We construct and estimate a model that features endogenous growth and technology diffusion. The spillover effects from research and development provide a link between business cycle fluctuations and long-term growth. Therefore, productivity growth is related to the state of the economy. Shocks to the marginal efficiency of investment explain the bulk of the low-frequency variation in growth rates. Transitory inflationary shocks lead to persistent declines in economic growth. During the Great Recession, technology diffusion dropped sharply, while long-term growth was not significantly affected. The opposite occurred during the 2001 recession. The growth mechanism induces positive comovement between consumption and investment.
    JEL: C11 E3 O4
    Date: 2014–12
  24. By: Lucas Bretschger; Christos Karydas
    Abstract: We study the eects of greenhouse gas emissions on optimum growth and climate policy by using an endogenous growth model with polluting non-renewable resources. Climate change harms the capital stock. Our main contribution is to introduce and extensively explore the naturally determined time lag between greenhouse gas emission and the damages due to climate change, which proves to be crucial for the transition of the economy towards its steady state. The social optimum and the optimal abatement policies are fully characterized. The inclusion of a green technology delays optimal resource extraction.The optimal tax rate on emissions is proportional to output. Poor understanding of the emissions diffusion process leads to suboptimal carbon taxes and suboptimal growth and resource extraction.
    Keywords: Non-Renewable Resource Dynamics, Pollution Diffusion Lag, Optimum Growth, Clean Energy, Climate Policy
    JEL: Q54 O11 Q52 Q32
    Date: 2014
  25. By: Anabela Queirós (Faculdade de Economia do Porto); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC TEC; OBEGEF)
    Abstract: Human capital is identified as one of the main determinants of economic growth and plays an important role in the technological progress of countries. Nevertheless, existing studies have to some extent neglected the importance of human capital on growth via the interaction it can have with a country’s industrial specialization. Additionally, the emphasis is mainly placed on supply-side determinants, being demand-side factors quite neglected, particularly the relevance of the processes of structural change. Thus, using a growth model which integrates variables from both the supply side and demand side, we assess the direct and indirect effects of human capital on economic growth, including in the latter the interaction of human capital with the industrial specialization of countries. Based on econometric panel data estimations involving a set of OCDE countries over 1960-2011, we found that the countries’ productive specialization dynamics is a crucial factor for economic growth. It is also shown that the interaction between human capital and structural change towards high knowledge-intensive industries impacts on the economic growth. However, the sign of this effect depends on the type of country and length of the period of analysis. Specifically, in the long term and in developed countries, where knowledge-intensive industries already account for a great share of the economy, the impact of the interaction between human capital and structural change is positive. In the case of less developed countries, and considering a shorter time period, the effect of human capital via specialization in high-tech and knowledge-intensive activities emerged as negative.
    Keywords: Economic Growth; Human Capital; Structural Change; Panel Data
    JEL: J24 O3 O4 O47
    Date: 2014–11
  26. By: Goodridge, PR; Haskel, J; Wallis, G
    Date: 2014–12–08
  27. By: García-Manglano, Javier (University of Oxford); Nollenberger, Natalia (Queen Mary, University of London); Sevilla, Almudena (Queen Mary, University of London)
    Abstract: This paper explores gendered patterns of time use as an explanatory factor behind fertility trends in the developed world. We review the theoretical foundations for this link, and assess the existing evidence suggesting that a more equal division of labor within the home leads to more children, both at the household (micro) and country (macro) levels. After decades of unprecedented fertility decline in the industrialized world, only a handful of countries in the West exhibit replacement fertility rates – around two children per woman. Paradoxically, birth rates are substantially lower in countries in which family units (and women within families) remain primarily responsible for familial care obligations, and where the role of the State in the provision of care services is marginal. Very low fertility poses challenges for economic growth and threatens the sustainability of pay-as-you-go welfare systems. It is thus important to understand why some developed countries managed to sustain near-replacement fertility rates or to recover from very low fertility, while others fell and still remain at lowest-low rates of about 1.3 children per woman. Looking at time-use and fertility trends for a few representative industrialized countries, we hint at the existence of a threshold ratio of gender equity in the distribution of domestic work that low fertility countries need to cross before being able to enter a phase of fertility recovery.
    Keywords: childcare, housework, demographic transitions, fertility decline, low fertility, fertility trends, fertility recovery, gender equity, gender attitudes, gender division of housework, Multinational Time Use Study, time-use, time allocation, time diary data
    JEL: J1 J11 J13
    Date: 2014–11
  28. By: Shahzad, Syed Jawad Hussain; Rehman, Mobeen Ur; Abbasi, Faiza; Zakaria, Muhammad
    Abstract: The relationship among remittances, foreign direct investments (FDI), exports and economic growth is known to have an important role in economic literature for countries suffering from technological distress and unemployment problems. This paper explores the long and short run relationship among remittances, exports, foreign direct investment and economic growth using data of South Asian countries. The study covers the period from 1989 to 2011. Stationarity of the variables have been examined through both first and second generation unit root tests to cater for Cross-section Dependence. After confirmation of panel cointegration, long term coefficients have been estimated by Fully Modified OLS (FMOLS) and Dynamic Ordinary Least Square (DOLS) models. Pooled Mean Group (PMG) methodology is applied to have an examination of the cause and effect relation among the associated variables. Results of the applied test suggest the presence of cointegration among the tested variables. FMOLS and DOLS estimation analysis reveals a positive impact of capital, remittances, exports, and FDI on economic growth whereas a negative impact of labor on growth is observed. The causality analysis confirms the presence of long term equilibrium relation among labor, economic growth, capital, remittances, exports, and foreign direct. In short run, exports Granger cause growth and FDI Granger cause exports. Feedback causality is also confirmed between remittances and capital in the South Asian countries.
    Keywords: Remittances, Exports, FDI, Economic Growth, South Asia
    JEL: E21 F43
    Date: 2014–11–29

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