nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒04‒02
seven papers chosen by
Marc Klemp
Brown University

  1. Religion and Innovation By Bénabou, Roland; Ticchi, Davide; Vindigni, Andrea
  2. Long-Run Growth Uncertainty By Pei Kuang; Kaushik Mitra
  3. Secularization and long-run economic growth By Strulik, Holger
  4. Can ethnic-linguistic diversity explain cross-country differences in social capital formation? By Cong Wang; Bodo Steiner
  5. Heterogeneity in Institutional Effects on Economic Growth: Theory and Empirical Evidence By Tamilina, Larysa; Tamilina, Natalya
  6. A Matching Model of Endogenous Growth and Underground Firms By Lisi, Gaetano; Pugno, Maurizio
  7. The Relationship between public spending on health and economic growth in Algeria: Testing for Cointegration and Causality By Fatima Boussalem; Zina Boussalem; Abdelaziz Taiba

  1. By: Bénabou, Roland; Ticchi, Davide; Vindigni, Andrea
    Abstract: In earlier work (Bénabou, Ticchi and Vindigni 2013) we uncovered a robust negative association between religiosity and patents per capita, holding across countries as well as US states, with and without controls. In this paper we turn to the individual level, examining the relationship between religiosity and a broad set of pro- or anti-innovation attitudes in all five waves of the World Values Survey (1980 to 2005). We thus relate eleven indicators of individual openness to innovation, broadly defined (e.g., attitudes toward science and technology, new versus old ideas, change, risk taking, personal agency, imagination and independence in children) to five different measures of religiosity, including beliefs and attendance. We control for all standard socio-demographics as well as country, year and denomination fixed effects. Across the fifty-two estimated specifications, greater religiosity is almost uniformly and very significantly associated to less favorable views of innovation.
    Keywords: attitudes; beliefs; creativity; culture; dogma; growth; ideas; innovation; religion; risk-taking; science; technical progress; tolerance; values
    JEL: D83 O31 O43 Z1 Z12
    Date: 2015–03
  2. By: Pei Kuang; Kaushik Mitra
    Abstract: A model of business cycles in which households do not have knowledge of the long-run growth of endogenous variables and continually learn about this growth is presented. The model features comovement and mutual reinforcement of households' growth expectations and market outcomes and suggests a critical role for shifting long-run growth expectations in business cycle fluctuations. There are important implications for estimating the output gap and the derived cyclically-adjusted fiscal budget balance computed by policy making institutions.
    Keywords: Trend, Expectations, Business Cycle, Output Gap, Cyclically-Adjusted Budget Balance
    JEL: E32 E62 D84
  3. By: Strulik, Holger
    Abstract: This paper integrates a simple theory of identity choice into a framework of endogenous economic growth to explain how secularization can be both cause and consequence of economic development. A secular identity allows an individual to derive more pleasure from consumption than religious individuals, leading secular individuals to work harder and to save more in order to experience this pleasure from consumption. These activities are conducive to economic growth. Higher income makes consumption more affordable and increases the appeal of a secular identity for the next generation. An extension of the basic model investigates the Protestant Reformation as an intermediate stage during the take-off to growth. Another extension introduces intergenerationally dependent religious preferences and demonstrates how a social multiplier amplifies the speed of secularization.
    Keywords: economic growth,religion,identity,productivity,secularization,comparative development
    JEL: N30 O10 O40 Z12 Z13
    Date: 2015
  4. By: Cong Wang (Department of Border Region Studies, University of Southern Denmark); Bodo Steiner (Department of Border Region Studies, University of Southern Denmark)
    Abstract: Motivated by theoretical arguments that assert a negative impact of ethnolinguistic diversity on social capital, this paper aims to provide some empirical evidence on the relationship between the two variables. In particular, using a cross section sample of 68 developed and developing countries, this paper has found a significant negative effect of ethnolinguistic diversity on social capital. Countries with fractionalized ethnic and linguistic groups as captured by both log number of languages and Desmet et al. (2012) and La Porta et al. (1999)’s measures on linguistic diversity tend to have lower levels of social trust, fewer memberships in social organizations, deteriorated social norms and structure, hence, lower overall social capital stock.
    Keywords: Ethnic and Linguistic Diversity, Social Capital, Economic Growth
    JEL: E0 D72 Z10
    Date: 2015–03
  5. By: Tamilina, Larysa; Tamilina, Natalya
    Abstract: This article explains the peculiarities of institutional effects on growth rates in post-communist countries. By proposing a certain dependence of the institution-growth nexus on the nature of institutional emergence, the distinction between revolutionary and evolutionary processes of institution formation is introduced. Theoretical and empirical juxtapositions show that transition countries’ institutions which are constructed revolutionarily differ from those that emerge evolutionarily in a twofold manner in their relationship to growth. Growth rates of their economies are less likely to depend on the quality of economic institutions and are more likely to be a function of the maturity of political institutions. In addition, economic institutions in post-communist countries are a product of the quality of political bodies to a greater extent than their evolutionary alternatives.
    Keywords: Economic Growth, Formal Institutions, Institutional Formation, Institutional Change, Post-Communist Countries
    JEL: O17 O43 O57 P26 P37
    Date: 2014–06
  6. By: Lisi, Gaetano; Pugno, Maurizio
    Abstract: Economic growth and unemployment exhibit an ambiguous relationship – according to empirical studies. This ambiguity can be investigated by observing the role of the underground economy in shaping the productivity of firms. Indeed, unemployment may be absorbed by underground firms, which adopt backward technology, at the cost of reduced economic growth. Alternatively, unemployment diminishes because productivity grows by employing workers who prefer to become skilled, and thus not to work in underground firms. This paper develops these arguments by using a matching model with underground firms and heterogeneous entrepreneurial ability, and by assuming skill-driven growth. Economic growth thus becomes endogenous, and both the underground sector and unemployment become persistent. The main result is that, under conditions of strict monitoring of the regularity of firms, the underground economy is squeezed, unemployment is reduced, and growth is high, whereas in the case of lax monitoring, the underground economy expands, unemployment is absorbed, and growth is low.
    Keywords: unemployment, underground firms, entrepreneurship, endogenous growth, human capital, education, matching models.
    JEL: E26 J24 J64 L26
    Date: 2015–02–16
  7. By: Fatima Boussalem (University of Jijel); Zina Boussalem (university of jijel); Abdelaziz Taiba (university of chlef)
    Abstract: This paper investigated the causality and co-integration relationships between public health expenditure and economic growth in Algeria during 1974-2014 using annual data. This paper concentrated on time series co-integration and causality in VECM framework. The findings revealed that there is a long-run causality from public health expenditure to economic growth, while it is not observed any short-run causality from expenditure health to economic growth. The lack of strong link from health to economic growth is not necessarily a reason to reallocate health investment away from the health sector. The improvements in health status will be worth the effort even if they turn out to have little effect on growth.
    Keywords: public Health Expenditure, Economic Growth, Co-integration, Causality
    JEL: I18 I15 C10
    Date: 2014–05

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