nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒05‒02
25 papers chosen by
Marc Klemp
Brown University

  1. "The Complementary between Technology and Human Capital in the Early Phase of Industrialization" By Raphael Franck; Oded Galor
  2. "Heterogeneity and Productivity" By Quamrul Ashraf; Oded Galor; Marc Klemp
  3. Economic Development, Novelty Consumption, and Body Weight: Evidence from the East German Transition to Capitalism By D. Dragone; N. R. Ziebarth
  4. Fertility, Regional Demographics, and Economic Integration By Hiroshi Goto; Keiya Minamimura
  5. Culture, Institutions and Democratization By Yuriy Gorodnichenko; Gerard Roland
  6. Religion and Innovation By Benabou, Roland; Ticchi, Davide; Vindigni, Andrea
  7. Regional income distribution in Mexico: new long-term evidence, 1895-2010 By José Aguilar-Retureta
  8. Is Poverty in the African DNA (Gene)? By Simplice Asongu; Oasis Kodila-Tedika
  9. The Weaker Sex? Vulnerable Men, Resilient Women, and Variations in Sex Differences in Mortality since 1900 By Mark R. Cullen; Michael Baiocchi; Karen Eggleston; Pooja Loftus; Victor Fuchs
  10. Structural Change and Non-Constant Biased Technical Change By Edgar Cruz
  11. Determinants of Growth in Fast Developing Countries: Evidence from Bundling and Unbundling Institutions By Simplice Asongu
  12. Innovation, Inequality and a Golden Rule for Growth in an Economy with Cobb-Douglas Function and an R&D Sector By Welfens, Paul J. J.
  13. Did Climate Change Influence English Agricultural Development? (1645-1740) By JosŽ L. Mart’nes-Gonz‡lez
  14. Growth, Pollution, and Life Expectancy: China from 1991-2012 By Guojun He; Maoyong Fan; Maigeng Zhou; Avraham Ebenstein; Michael Greenstone; Peng Yin
  15. Drivers of Growth in Fast Emerging Economies: A Dynamic Instrumental Quantile Approach By Simplice Asongu
  16. An analysis on optimal taxation and on policy changes in an endogenous growth model with public expenditure By Thomas Renstrom; Luca Spataro
  17. Modeling pollution and economic growth: the effect of a lethal threshold By Asuka Oura; Yasukatsu Moridera; Koichi Futagami
  18. Teritorial cohesion in the context of neoclassical growth models By Zbigniew Mogiła
  19. Institutional Constraints on Modern Economic Growth By Konstantin Yanovskiy; Sergey Zhavoronkov; Ilia Zatcovetsky; Vladimir Lisin; Dmitry Cherny; Sergey Shulgin
  20. Testing Capital Accumulation-Driven Growth Models in a Multiple-Regime Framework: Evidence from South Africa By Kevin S. Nell; Maria M. De Mello
  21. Structural Transformation, the Push-Pull Hypothesis and the Labour Market By Fabio Monteforte
  22. Economic Uncertainty, Parental Selection, and Children's Educational Outcomes By Chevalier, Arnaud; Marie, Olivier
  23. Financial development and economic growth: Evidence of non-linearity By Doumbia, Djeneba
  24. Corruption, FDI and Growth: All the truths of a corrupted regime before and after the social upsurge in Tunisia By Hamdi, Helmi; Hakimi, Abdelaziz
  25. Isoelastic elasticity of substitution production functions By Jakub Growiec

  1. By: Raphael Franck; Oded Galor
    Abstract: The research explores the effect of industrialization on human capital formation. Exploiting exogenous regional variations in the adoption of steam engines across France, the study establishes that in contrast to conventional wisdom that views early industrialization as a predominantly deskilling process, the industrial revolution was conducive for human capital formation, generating broad increases in literacy rates and education attainment.
    Keywords: Capital-Skill Complementarity, Economic Growth, Industrialization, Human Capital, Steam Engine.
    Date: 2015
  2. By: Quamrul Ashraf; Oded Galor; Marc Klemp
    Abstract: This research explores the effects of within-group heterogeneity on group-level productivity. It establishes that observed genetic diversity of 230 worldwide ethnic groups, as well as predicted genetic diversity of 1,331 ethnic groups across the globe, has a hump-shaped effect on economic prosperity, reflecting the trade-off between the beneficial and the detrimental effects of diversity on productivity. Moreover, the study demonstrates that variations in within-ethnic-group genetic diversity across ethnic groups contribute to ethnic and thus regional variation in economic development within a country.
    Keywords: Heterogeneity, Regional Development, Out-of-Africa Hypothesis, Comparative Development, Genetic Diversity, Nighttime Light Intensity
    Date: 2015
  3. By: D. Dragone; N. R. Ziebarth
    Abstract: This paper develops a conceptual framework that can explain why economic development goes along with increases in body weight and obesity rates. We first introduce the concept of novelty consumption, which refers to an increase in food availability due to trade or innovation. Then we study how novel food products alter the optimal consumption bundle and welfare, and possibly lead to changes in body weight. We test our model employing the German reunification as a fast motion natural experiment of economic development. Our data elicit detailed information on East Germans’ food consumption, body mass, and diet-related health. After the fall of the Wall, East Germans permanently changed their diet by consuming novel western food products. A significant population share permanently gained weight. This is consistent with our theoretical framework where past affects current consumption, and where novel goods determine consumption changes over time with ambiguous effects on dietrelated health.
    JEL: D11 D12 I12 I15 L66 O10 O33 Q18 R22
    Date: 2015–04
  4. By: Hiroshi Goto (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan); Keiya Minamimura (Graduate School of Economics, Kobe University)
    Abstract: To explain the links between population distribution and economic integration, we construct a spatial economics model with endogenous fertility. A higher population concentration increases real wages and child-raising costs, thus lowering the fertility rate. However, people migrate to more populated regions to obtain higher real wages. We show that mobility across regions results in more people flowing into highly populated regions, but lowers fertility rates there. The population growth path resembles a logistic curve in the early phase, but population decreases in the last phase. Additionally, economic integration leads to population concentration and decreases population size in the whole economy.
    Keywords: Population change, Migration, Agglomeration, Trade freeness
    JEL: F15 J13 R12 R23
    Date: 2015–04
  5. By: Yuriy Gorodnichenko; Gerard Roland
    Abstract: We construct a model of revolution and transition to democracy under an individualistic and a collectivist culture. The main result is that, despite facing potentially larger collective action problems, countries with an individualistic culture are more likely to end up adopting democracy faster than countries with a collectivist culture. Our instrumental variable estimation suggests a strong and robust effect of individualistic culture on average polity scores and length of democracy, even after controlling for other determinants of democracy emphasized in the literature. We provide evidence that countries with collectivist culture are also more likely to experience autocratic breakdowns and transitions from autocracy to autocracy.
    JEL: H1 P48 Z1
    Date: 2015–04
  6. By: Benabou, Roland (Princeton University); Ticchi, Davide (IMT Lucca); Vindigni, Andrea (IMT Lucca)
    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: innovation, creativity, science, technical progress, ideas, risk-taking, growth, religion, beliefs, attitudes, values, tolerance, dogma, culture
    JEL: D83 O31 O43 Z1 Z12
    Date: 2015–04
  7. By: José Aguilar-Retureta (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: In the last years, Economic History literature has paid close attention to the long-term changes undertaken by regional income inequality in different countries after the integration of their domestic markets. Nevertheless, this literature has mainly focused on developed economies (US and Europe). New evidence is required from peripheral economies, where economic growth has had different features, and income inequality may have been dominated by other forces and followed different trends. The aim of this paper is to analyse several dimensions of the long-term evolution of Mexican regional income inequality, from the early stages of domestic markets integration to the present (1895–2010). This analysis may be taken as basis for further explanatory analysis and may contribute to the emergence of new hypothesis to explain the long-term changes in regional inequality in peripheral economies.
    Keywords: Economic History, Regional Inequality, Economic Growth.
    JEL: N16 N96 R11
    Date: 2015
  8. By: Simplice Asongu (Yaoundé/Cameroun); Oasis Kodila-Tedika (Kinshasa, Democratic Republic of Congo)
    Abstract: A 2015 World Bank report on attainment of Millennium Development Goals concludes that the number of extremely poor has dropped substantially in all regions with the exception of Sub-Saharan Africa. We assess if poverty is in the African gene by revisiting the findings of Ashraf and Galor (2013, AER) and reformulating the ‘Out of Africa Hypothesis’ into a ‘Genetic Diversity Hypothesis’ for a ‘Within Africa Analysis’. We motivate this reformulation with five shortcomings arising for the most part from the 2015 findings of the African Gerome Variation Project, notably: limitations in the concept of space, African dummy in genetic diversity, linearity in migratory patterns, migratory origins and underpinnings of genetic diversity in Africa. Ashraf and Galor have concluded that cross-country differences in development can be explained by genetic diversity in a Kuznets pattern. Our results from an exclusive African perspective confirm the underlying hypothesis in a contemporary context, but not in the historical analysis. From a historical context, the nexus is U-shaped for migratory distance, mobility index and predicted diversity while for the contemporary analysis; it is hump-shaped for ancestry-adjusted predicted diversity. Hence, poverty is not in the African gene from a within-Africa comparative standpoint. Policy implications are discussed.
    Keywords: Africa; Genetic diversity; Comparative economic development
    JEL: N10 N30 N50 O10 O50 Z10
    Date: 2015–04
  9. By: Mark R. Cullen; Michael Baiocchi; Karen Eggleston; Pooja Loftus; Victor Fuchs
    Abstract: Sex differences in mortality (SDIM) vary over time and place as a function of social, health, and medical circumstances. The magnitude of these variations, and their response to large socioeconomic changes, suggest that biological differences cannot fully account for sex differences in survival. We document “stylized facts” about SDIM with which any theory will have to contend. We draw on a wide swath of mortality data, including probability of survival to age 70 by county in the United States, the Human Mortality Database data for 18 high-income countries since 1900, and mortality data within and across developing countries over time periods for which reasonably reliable data are available. We show that, in each of the periods of economic development after the onset of demographic and epidemiologic transition, cross-sectional variation in SDIM exhibits a consistent pattern of female resilience to mortality under adversity. Moreover, as societies develop, M/F survival first declines and then increases, a “SDIM transition” embedded within the demographic and epidemiologic transitions.
    JEL: I14 I15 J10 J16
    Date: 2015–04
  10. By: Edgar Cruz (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: Empirical evidence suggests that the differences in rates of technical progress across sectors are time-variant, implying that the bias in technological change is not constant. In this paper, we analyze the implications of this non-constant sectoral biased technical change for structural change and we assess whether this is an important factor behind structural transformations. To this end, we develop a multi-sectoral growth model where TFP growth rates across sectors are non-constant. We calibrate our model to match the development of the U.S. economy during the twentieth century. Our findings show that, by assuming non-constant biased technical change, a purely technological approach is able to replicate the sectoral transformations in the U.S. economy not only after but also prior to the World War II.
    Keywords: Multi-sector growth model, Structural change, Sector biased technical change, Baumol effect.
    JEL: O41 O47 O14 E29
    Date: 2015
  11. By: Simplice Asongu (Yaoundé/Cameroun)
    Abstract: Purpose – We assess growth determinants in the BRICS (Brazil, Russia, India, China and South Africa) and MINT (Mexico, Indonesia, Nigeria and Turkey) fast-developing nations for the period 2001-2011. Particular emphasis is laid on the bundling and unbundling of ten governance dynamics. Design/methodology/approach- Contemporary and non-contemporary Fixed- and Random-Effects regressions are employed as empirical strategies. GDP growth and real GDP output are used as dependent variables. The governance variables are bundled by means of principal component analysis. Findings- The following are some findings. First, governance is more positively significant in non-contemporary specifications as opposed to contemporary regressions. Second, there is some interesting evidence on the heterogeneity of political governance as a driver. Political governance and its constituents (political stability and voice & accountability) are significantly positive in GDP growth but insignificant in real GDP output regressions. Third, the other governance dynamics are more significant determinants of real GDP output, as opposed to GDP growth. Accordingly, they are insignificant in contemporary regressions and negatively significant in non-contemporary regressions for GDP growth. Fourth, the constituents of economic governance have the highest magnitude in the positive effects of governance dynamics on real GDP output. Practical implications- The following are some practical implications. First, lag determinants are necessary for growth targeting or timing of growth dynamics. Growth drivers for the most part are more significantly determined by past information. Second, political governance is the most important driver of economic growth, with the significance of effects more apparent in non-contemporary regressions. Third, economic governance and institutional governance are more positively predisposed to driving real GDP output than GDP growth. Originality/value- As far as we have reviewed, it is the first study to investigate growth determinants in the BRICS and MINT nations. It has strong implications for other developing countries on the contemporary and non-contemporary dynamics of governance in driving economic prosperity.
    Keywords: Economic Growth; emerging countries; governance
    JEL: C52 F21 F23 O40 P37
    Date: 2015–03
  12. By: Welfens, Paul J. J. (University of Wuppertal)
    Abstract: The innovative approach presented introduces a modified neoclassical growth model which includes a new bias of technological progress in a quasi-endogenous growth model in which part of labor is used in the research & development sector. The combination of a macroeconomic production function and a new progress function, plus the assumption that the output elasticity of capital is positively influenced by the size of the R&D sector, sheds new light on innovation and growth as well as income inequality: Thus there is a new approach for explaining Piketty's historical findings of a medium term rise of the capital income share in industrialized countries – both in the earlier and later part of the 19th century and in 1990-2010. A rising share of capital income can be explained within this approach by the increase in the output elasticity of capital, which has been developed in a new way, namely in the context of R&D. In the approach presented herein, the golden rule issues are also highlighted and it is shown that choosing the right size of the R&D sector will bring about maximum sustainable per capita consumption. While the basic new model is presented for the case of a closed economy, one could easily accommodate both trade and foreign direct investment and thereby get a better understanding of complex international investment, trade and FDI dynamics – including with respect to the envisaged Transatlantic Trade and Investment Partnership.
    Keywords: innovation, growth, inequality, golden rule, Piketty
    JEL: O11 O32 O40 D63
    Date: 2015–04
  13. By: JosŽ L. Mart’nes-Gonz‡lez (University of Barcelona)
    Abstract: In this paper I analyze the ÔNitrogen ParadoxÕ stated by Robert Allen in his interpretation of the English Agricultural Revolution as an adaptive response to the agro-climatic impacts of the last phase of the Little Ice Age. The colder and more humid climate during the second half of the 17th century negatively affected the yield of the land, but it also accelerated change in the agrarian sector. The first evidence suggests that the efforts from farmers could begin to be felt in the cold period from 1660-70. Although the results were not very visible at first, this increased effort prevented a greater fall in production. This can be seen in the wheat series, where production rose slightly. As wheat demand stagnated due to a slowdown in the rise of the population, wheat prices fell, determining the evolution of relative prices and a diversification in production. In others words, the crucial driving forces of the transition from the crisis to the agrarian revolution were climate, population and the capacity of adaptation. In order to prove this hypothesis, I developed new intermediate tools, opening an interesting research field in economic history.
    Keywords: Climate Change, Agrarian Revolution, Adaptation
    JEL: N53 O13 Q10 Q24 Q54 Q55 Q57
    Date: 2015–04
  14. By: Guojun He (Department of Economics, Hong Kong University of Science and Technology; Institute for Emerging Market Studies, Hong Kong University of Science and Technology); Maoyong Fan (Department of Economics, Ball State University); Maigeng Zhou (National Center for Chronic and Noncommunicable Disease Control and Prevention, Chinese Center for Disease Control and Prevention); Avraham Ebenstein (Department of Economics, Hebrew University of Jerusalem); Michael Greenstone (Department of Economics, University of Chicago; National Bureau of Economic Research (NBER)); Peng Yin (National Center for Chronic and Noncommunicable Disease Control and Prevention, Chinese Center for Disease Control and Prevention)
    Abstract: This paper examines the relationship between income, pollution, and mortality in China from 1991-2012. Using first-difference models, we document a robust positive association between city-level GDP and life expectancy. We also find a negative association between city-level particulate air pollution exposure and life expectancy that is driven by elevated cardiorespiratory mortality rates. The results suggest that while China's unprecedented economic growth over the last two decades is associated with health improvements, pollution has served as a countervailing force.
    Keywords: growth, pollution, life expectancy, China
    JEL: Q13 P28 Q28 Q53
    Date: 2015–02
  15. By: Simplice Asongu (Yaoundé/Cameroun)
    Abstract: This study complements the scarce literature on growth determinants in fast emerging economies of the BRICS and MINT by assessing the determinants throughout the conditional distributions of the growth rate and real GDP output for the period 2001-2011. An instrumenal variable (IV) quantile regression approach is complemented with Two-Stage-Least Squares and IV Least Absolute Deviations. The instrumentation process is dynamic. The following findings are established. First, while Gross FDI has a negative effect on economic growth, the impact of Net FDI is positive, with a higher magnitude in top quantiles of the distributions. Second, the positive effect of natural resources is more apparent in countries with low initial growth levels. Third, the impact of telecommunications infrastructure is not very significant. Fourth, whereas the incidence of bank credit is positive for GDP growth, it is negative for real GDP output. Fifth, while trade openness is positive in bottom quantiles of GDP growth, but for the highest quantile in real GDP output, it is consistently negative on real GDP output. Sixth, while the incidence of political stability is negative on GDP growth, it is positive on real GDP output, with the negative (positive) effect apparent only in top (bottom) quantiles of GDP growth (real GDP output). Policy implications are discussed.
    Keywords: Economic Growth; Emerging countries; Quantile regression
    JEL: C52 F21 F23 O40 O50
    Date: 2015–04
  16. By: Thomas Renstrom (University of Durham (UK)); Luca Spataro (Dipartimento di Economia e Management, University of Pisa (Italy))
    Abstract: In this work we analyse the issue of optimal taxation and of policy changes in an endogenous growth model driven by public expenditure, in the presence of endogenous fertility and labour supply. While normative analysis confirms the Chamley-Judd result of zero capital income tax, positive analysis reveals that the presence of endogenous fertility produces different results as for the effects of taxes on total employment.
    Keywords: Taxation, endogenous fertility, critical level utilitarianism, population
    JEL: D63 E21 H21 J13 O4
    Date: 2015–04
  17. By: Asuka Oura (Graduate School of Economics, Osaka University); Yasukatsu Moridera (Graduate School of Economics, Osaka University); Koichi Futagami (Graduate School of Economics, Osaka University)
    Abstract: The accumulation of pollution negatively impacts human health. Extreme increases in pollution, in particular, may have lethal implications for human beings|and, indeed, all living organisms. This paper thus devises a new model of economic growth that takes into account these lethal effects of accumulated pollution via a pollution threshold to show two key results. First, if an abatement technology is relatively inefficient, there exists a stationary steady state in which consumption and pollution stop growing. Second, if the abatement technology is sufficiently efficient, there exists a path along which pollution decreases at an accelerating rate until finally reaching zero. In this case, consumption grows at a constant rate.
    Keywords: Endogenous growth, Pollution disutility, Pollution abatement
    JEL: O44 Q52
    Date: 2015–04
  18. By: Zbigniew Mogiła (Wrocław Regional Development Agency)
    Abstract: The Lisbon Treaty and the EU's high-level strategy Europe 2020 enrich the notion of economic and social cohesion by introducing a third territorial dimension. The ambiguity of territorial cohesion, however, poses a problem for policy makers and analysts. In this paper territorial cohesion is defined using the concept of territorial optimum which combines maximization of regional product with territorial utility. The main objective of the paper is to analyze how the elements of territorial optimum are embodied in the traditional neoclassical and endogenous growth models. The analysis is divided into two parts: theoretical and empirical one. In the former the role of space and territory in the main neoclassical models is evaluated and interpreted. The latter part is structured in accordance to the components of territorial optimum. Particular emphasis is placed upon such spatial categories as agglomeration effects and public infrastructure. Several general conclusions and insights are drawn showing that even traditional neoclassical growth models provide an implicit territorial interpretation of development determinants. However, the overwhelming majority of both theoretical and empirical concepts based on the neoclassical paradigm allow only for one or two spatial factors and do not take into account the significance and complexity of territory as an additional factor affecting both production and productivity. It gives rise to further attempts at implementing territory in the mainstream modelling framework in a more robust and credible way.
    Keywords: territorial cohesion, neoclassical growth models, territorial optimum
    JEL: R11 R12 R13
    Date: 2014–12
  19. By: Konstantin Yanovskiy (Gaidar Institute for Economic Policy); Sergey Zhavoronkov (Gaidar Institute for Economic Policy); Ilia Zatcovetsky (Samuel Neaman Institute for Advanced Studies in Science and Technology); Vladimir Lisin (Chairman of the board of directors of Novolipetsk Steel Company); Dmitry Cherny (Ministry of Economic Development of the Russian Federation Department for Innovative Development); Sergey Shulgin (The Russian Presidential Academy of National Economy and Public Administration (RANEPA))
    Abstract: How to import modern Western Institutions to suppress economic growth in underdeveloped countries? Russian experience and some warnings for newcoming reformers The monograph «Institutional Constraints on Modern Economic Growth" deals with the most dangerous obstacles standing in the way of long term economic growth. Some of these obstacles have been studied extensively, while others are well known but have been largely forgotten over time; finally, there are some that for various reasons are normally ignored. "I believe that the United States today is not an appropriate model for Mexico or other low-income countries…. There have been no summits about how you privatize governmental activities. You have seen summits about how to raise taxes, about spending more of the taxpayers' money, about how to impose more controls on the people. That is the sense in which I say, take as your model the U.S. in its first 150 years. We can afford our nonsense now because we had so long a period during which to build a base. You can't." wrote Milton Friedman[1] in 1994. The book contains specification of the principal cases of "nonsense". The authors are searching for historic records of "damaged" institutions their roots and causes of the damages, tracking them to universal suffrage rising and to the earlier, pre-capitalist institutions, so that to develop the policy advice for new democracies how to escape all these traps.
    Keywords: private property safeguards, import of institutions; Economic Growth; Government failures; political institutions
    JEL: D72 D73 H41 N40 P16 P51
    Date: 2015
  20. By: Kevin S. Nell (Center for Economics and Finance, University of Porto); Maria M. De Mello (Center for Economics and Finance, University of Porto)
    Abstract: This paper proposes two types of AK-style endogenous growth models to test the physical capital accumulation hypothesis in a ‘typical’ developing country with multiple regimes: a strong version, in which technological progress is fully endogenous to capital accumulation, and a weaker version, where technological progress and capital accumulation are complementary factors in the growth process. The empirical application supports the relevance of the weaker version across South Africa’s ‘faster-growing’ regime (1952-1976) and ‘slower-growing’ regime (1977-2012). To improve the economy’s post-2012 growth performance on a sustainable basis, the simulation exercise suggests a refined set of policies that simultaneously attracts foreign direct investment and raises the domestic saving/investment rate. Thus, to re-ignite the complementary relationship between technological progress and capital accumulation in the South African economy, both sources of growth should feature prominently in the initial decision-making process of policymakers.
    Keywords: AK model; multiple regimes, growth transitions, physical capital accumulation; technological progress; foreign direct investment; South Africa; time-series econometrics
    JEL: C22 O11 O41 O47 O55
    Date: 2015–04
  21. By: Fabio Monteforte
    Abstract: This paper proposes a small-scale general equilibrium model of structural transformation with an urban labour market characterized by search frictions. The model is used to investigate the role of sectoral TFPs as main drivers of structural change and a new growth accounting exercise gives a quantitative reassessment of the importance of the labour reallocation bonus in structural transformations. The model is calibrated to data for post-war Spain and its transition from dictatorship to democracy. Counterfactual simulations point towards productivity improvements in agriculture as the main driver, while modifications in labour market institutions affect mainly the labour market itself, with only a modest effect on structural change.
    Keywords: dual economies, matching frictions, urban unemployment, structural transformation, growth accounting, Solow residual.
    JEL: J40 O10 O11 O41 O47
    Date: 2015–04–20
  22. By: Chevalier, Arnaud (IZA); Marie, Olivier (Maastricht University)
    Abstract: After the fall of the Berlin Wall, East Germany experienced an unprecedented temporary drop in fertility driven by economic uncertainty. Using various educational measures, we show that the children born during this nativity slump perform worse from an early age onwards. Consistent with negative selection, mothers who gave birth in that period had worse observed personal characteristics. These children are also less likely to have grown up within stable family environment. Investigating underlying mechanisms reveals that parental educational input and emotional attachment were also lower for these children. Finally, sibling analysis enables us to reject time of birth effects.
    Keywords: parental selection, fertility, economic uncertainty, education
    JEL: J13 I20
    Date: 2015–04
  23. By: Doumbia, Djeneba
    Abstract: This paper explores the non-linear relationship between financial development and economic growth. It mainly relies on the Panel Smooth Transition Regression (PSTR) model of Gonzalés et al. (2005) and three metrics of financial development to endogenously assess the impact of financial development on growth. Using a sample of 43 advanced and developing economies over the period 1975–2009, the paper highlights that financial development supports economic growth in low-income and lower middle income countries by enhancing saving and investment behaviour. However, in more developed economies, the impact of financial development is nil or negative, reflecting that further credit provisioning in these economies tend to exacerbate financial vulnerabilities, which is detrimental to growth.
    Keywords: Financial Development; Economic Growth; Non-linearity; System GMM; PSTR
    JEL: C33 O11 O16 O47
    Date: 2015–01–31
  24. By: Hamdi, Helmi; Hakimi, Abdelaziz
    Abstract: The aim of this paper is to investigate the dynamic relationship between corruption, investment and economic growth in Tunisia within a multivariate framework. In the empirical section we use data span from 1976 to 2013 and we perform a vector error correction model and cointegartion technique to detect causality between corruption, investment, economic growth, credit to the private sector and foreign direct investment. The main findings of this paper show that corruption hampered Tunisia economic growth in the short-run and the long run as well. Corruption could be the main reason of the slowdown of investment activities and the low inflow of capital. Another important conclusion was revealed in this paper is that corruption get worsened in the period that follows the social upsurge of December 2010. Therefore, the main goals of the so called “revolution” are from being achieved yet. Hence, more works are needed to fight corruption in Tunisia.
    Keywords: Corruption, investment, Growth, Tunisia
    JEL: G2 G28 O11 O43
    Date: 2015–04–19
  25. By: Jakub Growiec
    Abstract: We generalize the normalized Constant Elasticity of Substitution (CES) production function by allowing the elasticity of substitution to vary isoelastically with (i) relative factor shares, (ii) marginal rates of substitution, (iii) capital–labor ratios, or (iv) capital–output ratios. Ensuing four variants of Isoelastic Elasticity of Substitution (IEES) production functions have a range of intuitively desirable properties and yield empirically testable predictions for the functional relationship between relative factor shares and capital–labor ratios.
    Keywords: production function, factor share, elasticity of substitution, marginal rate of substitution, normalization.
    JEL: E23 O47
    Date: 2015

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