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on Economic Growth |
| By: | Daron Acemoglu; James A. Robinson |
| Abstract: | Thomas Piketty's (2014) book, Capital in the 21st Century, follows in the tradition of the great classical economists, like Marx and Ricardo, in formulating general laws of capitalism to diagnose and predict the dynamics of inequality. We argue that general economic laws are unhelpful as a guide to understand the past or predict the future, because they ignore the central role of political and economic institutions, as well as the endogenous evolution of technology, in shaping the distribution of resources in society. We use regression evidence to show that the main economic force emphasized in Piketty's book, the gap between the interest rate and the growth rate, does not appear to explain historical patterns of inequality (especially, the share of income accruing to the upper tail of the distribution). We then use the histories of inequality of South Africa and Sweden to illustrate that inequality dynamics cannot be understood without embedding economic factors in the context of economic and political institutions, and also that the focus on the share of top incomes can give a misleading characterization of the true nature of inequality. |
| JEL: | O20 P16 P48 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20766&r=gro |
| By: | Konte M. (UNU-MERIT) |
| Abstract: | This paper re-examines the impact of remittance inflows on growth using data for developing countries over the period 1970-2010. The paper seeks to understand why it has been so difficult to find a positive impact of remittances on growth despite the growing amount of remittances in many developing countries and the different studies that have emphasized the positive effect of remittances on poverty and inequality. We relax the hypothesis that all countries follow the same unique growth regime and test whether the impact of remittances on growth depends on the growth regime to which a country belongs. We apply the newly bias-adjusted three-step finite mixture approach, which incorporates corrections into the different steps of the estimation. We find that our data are best described by an econometric model with two different growth regimes one in which remittances have a positive and significant impact on growth and another in which the effect of remittances is insignificant. The analysis of the determinants of the probability of being in the remittances growth-enhancing regime shows that an increase in the level of financial development decreases the probability of a country being in this growth regime, while being a Sub-Saharan African country increases this probability. |
| Keywords: | Remittances; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; |
| JEL: | F24 O47 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2014075&r=gro |
| By: | Gerard J. van den Berg; Pia R. Pinger |
| Abstract: | This paper examines the extent to which pre-puberty nutritional conditions in one generation affect productivity-related outcomes in later generations. Recent findings from the biological literature suggest that age 8-12 is a critical period for male germ cell development. We build on this evidence and investigate whether undernutrition at that age biologically transmits to children and grandchildren. Our findings indicate that third generation males (females) tend to have higher mental health scores if their paternal grandfather (maternal grandmother) was exposed to a famine during preadolescence. These effects seem to result from a biological shock and are not driven by social processes. |
| Keywords: | Famine, transgenerational transmission, epigenetics, mental health, education, long-run effects, nutrition, intergenerational effects, slow-growth period |
| JEL: | I12 J11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp709&r=gro |
| By: | Bellou, Andriana (University of Montreal); Cardia, Emanuela (University of Montreal) |
| Abstract: | The baby-boom and subsequent baby-bust have shaped much of the history of the second half of the 20th century; yet it is still largely unclear what caused them. This paper presents a new unified explanation of the fertility Boom-Bust that links the latter to the Great Depression and the subsequent economic recovery. We show that the 1929 Crash attracted young married women 20 to 34 years old in 1930 (whom we name D-cohort) in the labor market possibly via an added worker effect. Using several years of Census micro data, we further document that the same cohort kept entering into the market in the 1940s and 1950s as economic conditions improved, decreasing wages and reducing work incentives for younger women. Its retirement in the late 1950s and in the 1960s instead freed positions and created employment opportunities. Finally, we show that the entry of the D-cohort is associated with increased births in the 1950s, while its retirement turned the fertility Boom into a Bust in the 1960s. The work behavior of this cohort explains a large share of the changes in both yearly births and completed fertility of all cohorts involved. |
| Keywords: | retirement, added worker effect, Great Depression, baby bust, baby boom, fertility |
| JEL: | J11 J12 J13 J21 J24 J26 J31 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8727&r=gro |
| By: | Lasha Lanchava |
| Abstract: | In response to the problem of shrinking birthrates in the country, in October 2007, the head of the Georgian Orthodox church announced that he would personally baptize any third and further baby born to Orthodox families from that time. This study uses the initiative as a natural experiment to explore the economic consequences of religious activity. This analysis uses individual level survey data from the Caucasus Resource Research Center (CRRC) Georgia on fertility before and after the initiative for Orthodox Christians (treatment group) and Non- Orthodox Christians (control group) population to identify the effect of the church leader’s promise on birth rates. Difference-in-differences estimation procedure is employed to examine the potential causal effect. This analysis does not find evidence that the church initiative had an effect on fertility. |
| Keywords: | fertility; religion; Christianity; Difference-in-Differences; panel data; |
| JEL: | J13 Z12 C13 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:cer:papers:wp521&r=gro |
| By: | Coccia M. (UNU-MERIT) |
| Abstract: | An interesting problem is the analysis of effects of the predominant impact of technological change on the health of societies. This study considers technological change as the human activity that generates a huge impact on societies and causes environmental disorders affecting the health of population. In particular, technical innovations support the industrialisation and human development, which by a social change based on population growth, mass production and consumption, and resources depletion, engenders pollution and several environmental carcinogens. This study shows that a main effect of the critical impact of technological change on societies is the high cancer incidence of population living in industrialised areas of opulent and advanced countries. Vital empirical evidence and linkages between observed facts endeavour to explain the major relationships concerning the interactions among technology, ecosystems and the health of societies. |
| Keywords: | Health and Economic Development; Technological Change: Choices and Consequences; Diffusion Processes; Environment and Growth; Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling; |
| JEL: | O33 O44 I15 Q53 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2014089&r=gro |
| By: | Alderman, Harold; Headey, Derek D. |
| Abstract: | Though parental education is widely perceived to be an important determinant of child nutrition outcomes, there remain significant uncertainties about whether maternal or paternal education matters most, whether there are increasing or decreasing returns to parental education, and whether these returns are robust given that recent gains in enrollment have not always translated into commensurate gains in learning outcomes. In this paper we investigate these questions through a statistical analysis of child growth data for approximately 99,000 children in 19 countries with some of the highest burdens of undernutrition. Pooling across countries, we find that maternal education yields larger returns than paternal education, although for both sexes positive returns generally only appear with secondary education. |
| Keywords: | Children, Education, Nutrition, malnutrition, Undernutrition, Stunting, parental education, Parents, |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1379&r=gro |
| By: | Arshad Hayat (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nábreží 6, 111 01 Prague 1, Czech Republic) |
| Abstract: | In the paper, I explored links between inflow of FDI, natural resource abundance and economic growth. The paper is an attempt to analyze a lager sample of 106 countries and investigate the impact of FDI inflow on the economic growth of the host country. Further, natural resource abundance is considered to slow down the economic growth. The paper explores if the natural resource abundance affect the FDI-growth relationship. Using panel data for a sample the period 1993-2012, the paper uses fixed effects model and conclude that FDI inflow accelerates economic growth of the host country. However, the presence of natural resources slows down the FDI induced growth. The same results hold after controlling for endogeneity. |
| Keywords: | Foreign Direct Investment, Economic Growth, Natural Resources, Resource Curse, Hausman Test |
| JEL: | F23 F43 O4 Q0 |
| Date: | 2014–12 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2014_36&r=gro |
| By: | Marjit, Sugata |
| Abstract: | The purpose of this paper is to propose a model where trade has a direct and positive impact on growth rate of two trading nations beyond the level effect. We use the idea of virtual trade in intermediates induced by non- overlapping time zones and show how trade can increase the equilibrium optimal rate of growth. In this structure the trade impact goes beyond the level effect and directly causes growth. Typically standard models of trade cannot generate an automatic growth impact. Virtual trade may allow production to continue for 24x7 in separated time zones such as between US and India and that can lead to higher growth for both countries. Later we extend the model to incorporate accumulation of skill which becomes necessary for sustaining steady state growth. |
| Keywords: | International Trade, Time Zone, Growth |
| JEL: | F10 F43 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:60831&r=gro |
| By: | Atsuyoshi Morozumi; Francisco José Veiga |
| Abstract: | This paper examines the role of institutions in the nexus between public spending and economic growth. Using a newly assembled dataset of 80 countries over the 1970-2010 period, we show that only when institutions prompt governments to be accountable to the general citizen does the capital component of public spending significantly promote growth. The critical role of accountability remains regardless of the financing sources of capital spending, including a reallocation from current spending, an increase in revenue, and a rise in the budget deficit. Meanwhile, current spending does not show a robust growth-fostering effect, for any level of government accountability. We highlight that it is the type of institutions affecting the state-citizen relations that plays a key role in the capital spending-growth nexus, not the country's income level or the type of institutions affecting citizen-citizen relations. Our interpretation of the distinct role of government accountability in this nexus is that ineficiencies induced by unaccountable oficials' rent-seeking behavior in public investment mitigate otherwise growth-fostering effects of capital spending. |
| Keywords: | Economic growth, Public spending, Public investment efficiency, Institutions, Accountability |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:14/18&r=gro |
| By: | Kamiar Mohaddes; Mehdi Raissi |
| Abstract: | This paper examines the long-run relationship between consumer price index industrial workers (CPI-IW) inflation and GDP growth in India. We collect data on a sample of 14 Indian states over the period 1989–2013, and use the cross-sectionally augmented distributed lag (CSDL) approach of Chudik et al. (2013) as well as the standard panel ARDL method for estimation—to account for cross-state heterogeneity and dependence, dynamics and feedback effects. Our findings suggest that, on average, there is a negative long-run relationship between inflation and economic growth in India. We also find statistically-significant inflation-growth threshold effects in the case of states with persistently-elevated inflation rates of above 5.5 percent. This suggest the need for the Reserve Bank of India to balance the short-term growthinflation trade-off, in light of the long-term negative effects on growth of persistently-high inflation. |
| Keywords: | Inflation;India;Economic growth;Consumer price indexes;Time series;Panel analysis;India, inflation, growth, threshold effects, cross-sectional heterogeneity and dependence. |
| Date: | 2014–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/222&r=gro |
| By: | Dalila NICET-CHENAF; Eric ROUGIER |
| Abstract: | This paper quantitatively compares Middle East and North African (MENA) countries’ growth patterns with those of a sample of middle-income countries. Three complementary sets of growth determinants are tested: accumulation, institutions and structural change. After having estimated the model on a sample of middle income countries, our comparative analysis shows that MENA economies sharply contrast with other middle income emerging economies with respect to two main dimensions: (1) the sectoral structure of production and (2) the institutional environment. The assumption of complementary effect of the accumulation, institutional and structural growth determinants is also tested. We show that the MENA pattern of growth exhibits structural weaknesses, like the combination of a low pace of structural change and high corruption levels, which may have hindered the expansion of highly productive job, and possibly bred massive discontent in the region. |
| Keywords: | Economic growth; Structural change; Institutions; Corruption; Middle-East and North-Africa; Middle-income economies; Quantitative comparative analysis; Panel data; GMM estimation |
| JEL: | O4 J2 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:grt:wpegrt:2014-23&r=gro |
| By: | Inekwe John Nkwoma |
| Abstract: | This study contributes in bridging the dichotomy between economic growth and business cycle paradigms by providing dynamic characterisation of the link between economic growth, risk aversion, uncertainty and variability in industrial production, consumption and investment. In a system of equations, the study reveals that risk aversion, uncertainty and variability of business cycle components aid to contract growth. In contrast, ambiguous relationship exists between variability of hours worked and economic growth. Uncertainty and risk aversion induce increment in variability of business cycle components. Across countries, economic growth remains sensitive to the level of risk aversion and uncertainty |
| Keywords: | Growth, Volatility, Business, Cycle, Uncertainty, Risk Aversion |
| JEL: | G1 E20 E44 O40 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:mos:moswps:2014-38&r=gro |
| By: | Vesna Simiæ, |
| Abstract: | The paper deals with a topic that is related to the economic development of Serbia. First, they provide economic development goals. Then, the author pays attention to the economic growth. An analysis of the current state of economic growth is a slow and long process. Then, the paper pays attention to the preconditions that are important for economic growth. At the end of the given function of economic growth. |
| Keywords: | business and economic development, economic growth, economic growth functions, Serbia. |
| JEL: | O10 O12 O40 |
| Date: | 2014–09 |
| URL: | http://d.repec.org/n?u=RePEc:esb:casdrg:2014-216&r=gro |
| By: | Diewert, W. Erwin |
| Abstract: | The paper obtains relatively simple exact expressions that relate value added Total Factor Productivity growth (TFP growth or Multifactor Productivity Growth) in a value added framework to the corresponding measures of TFP growth in a gross output framework when Laspeyres or Paasche indexes are used to aggregate outputs and inputs. Basically, as the input base becomes smaller, the corresponding estimates of TFP growth become larger. A fairly simple approximate relationship between Fisher indexes of gross output TFP growth and the corresponding Fisher index of value added TFP growth is also derived. The methodology developed in this note can be applied in other situations. |
| Keywords: | Total Factor Productivity growth, TFP growth, Multifactor Productivity growth, MFP growth, Laspeyres, Paasche and Fisher index number formulae, magnif |
| JEL: | C43 D24 |
| Date: | 2014–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:bricol:erwin_diewert-2014-56&r=gro |
| By: | Vicente Royuela; Paolo Veneri; Raul Ramos |
| Abstract: | The purpose of this paper is to understand how income inequality is associated with economic growth in OECD regions and whether the degree and type of urban concentration affects this relationship. Both income inequality and urban concentration can be seen as patterns of resource allocation that are particularly interlinked at the regional level. We combine household survey data and macroeconomic databases, covering a period ranging from 2004 to 2012 for comparable regions in 15 OECD countries. Econometric results show that, at least for the short period under consideration, there is a general negative association between inequalities and economic growth, especially since the start of the economic crisis. This relationship is sensitive to the type of urban structure. Higher inequalities seem to be more detrimental for growth in large cities, while regions characterised by small cities and rural areas are less affected. |
| Keywords: | economic growth, inequality, OECD regions, urban |
| JEL: | O15 R11 R12 |
| Date: | 2014–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaab:2014/10-en&r=gro |
| By: | Sandra Marcelino; Ivetta Hakobyan |
| Abstract: | In 1996, the IMF and the World Bank introduced the Heavily Indebted Poor Countries Initiative—a comprehensive debt relief program aimed at reducing the external debt burden of eligible countries to sustainable levels, provided they carry out strong programs of macroeconomic adjustment and structural reforms designed to promote growth and reduce poverty. Now that the HIPC Initiative is nearly completed, this paper investigates whether the initiative managed to spur growth, either directly or indirectly through investment. In contrast to earlier studies, we conclude that there is some evidence of positive effects of the HIPC Initiative on growth. Such evidence suggests that the HIPC Initiative and MDRI have helped HIPC-eligible countries to reach higher growth, but it remains unclear whether this is through higher investment or another channel. Also, the analysis illustrates that it is hard to disentangle pure debt-relief effects from other concurrent factors. |
| Keywords: | Economic growth;Low-income developing countries;Debt relief;HIPC Initiative;HIPC Initiative, Debt relief, Growth, Investment |
| Date: | 2014–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:14/230&r=gro |