nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒01‒14
seventeen papers chosen by
Marc Klemp
Brown University

  1. The Rise and Decline of General Laws of Capitalism By Daron Acemoglu; James A. Robinson
  2. Do remittances not promote growth? : a bias-adjusted three-step mixture-of-regressions By Konte M.
  3. Transgenerational Effects of Childhood Conditions on Third Generation Health and Education Outcomes By Gerard J. van den Berg; Pia R. Pinger
  4. Baby-Boom, Baby-Bust and the Great Depression By Bellou, Andriana; Cardia, Emanuela
  5. Does Religious Activity Affect Childbearing Decisions? The Case of Georgia By Lasha Lanchava
  6. Technology & environment : some possible damaging effects of technological change in advanced and opulent societies By Coccia M.
  7. The nutritional returns to parental education: By Alderman, Harold; Headey, Derek D.
  8. FDI and Economic Growth: The Role of Natural Resources By Arshad Hayat
  9. Virtual Trade and Growth By Marjit, Sugata
  10. Public spending and growth: the role of government accountability By Atsuyoshi Morozumi; Francisco José Veiga
  11. Does Inflation Slow Long-Run Growth in India? By Kamiar Mohaddes; Mehdi Raissi
  12. What is so specific with Middle-East and North-African pattern of growth and structural change? A quantitative comparative analysis By Dalila NICET-CHENAF; Eric ROUGIER
  13. Business Cycle Variability and Growth Linkage By Inekwe John Nkwoma
  15. A Note on Reconciling Gross Output TFP Growth with Value Added TFP Growth By Diewert, W. Erwin
  16. Income Inequality, Urban Size and Economic Growth in OECD Regions By Vicente Royuela; Paolo Veneri; Raul Ramos
  17. Does Lower Debt Buy Higher Growth? The Impact of Debt Relief Initiatives on Growth By Sandra Marcelino; Ivetta Hakobyan

  1. 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
  2. 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
  3. 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
  4. 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
  5. 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
  6. 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
  7. 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
  8. 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
  9. 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
  10. 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
  11. 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
  12. 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
  13. 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
  14. 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
  15. 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
  16. 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
  17. 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

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