nep-gro New Economics Papers
on Economic Growth
Issue of 2015‒12‒12
eight papers chosen by
Marc Klemp
Brown University

  1. Human Capital Persistence and Development By Rudi Rocha; Claudio Ferraz; Rodrigo R. Soares
  2. The Effect of the Spanish Reconquest on Iberian Cities By David Cuberes; Rafael González-Val
  3. Fertility and PAYG Pensions in an Overlapping Generations Model with Endogenous Retirement By Chen, Hung-Ju
  4. Political Institutions, Technology and Growth: a dynamic panel approach By Zuazu Bermejo, Izaskun
  5. An Empirical Note on Tribalism and Government Effectiveness By Kodila-Tedika, Oasis; Asongu, Simplice
  6. Trust and Quality of Growth: A Note By Asongu, Simplice; Gupta, Rangan
  7. Total Factor Productivity and the Institutional Possibility Frontier: An Outline of a Link between Two Theoretical Perspectives on Institutions, Culture and Long Run Growth By Ilya Lokshin
  8. Economic growth and real volatility: The case of Latin America and the Caribbean By Cárcamo-Díaz, Rodrigo; Pineda Salazar, Ramón

  1. By: Rudi Rocha; Claudio Ferraz; Rodrigo R. Soares
    Abstract: This paper examines the role of human capital persistence in explaining long-term development. We exploit variation induced by a state-sponsored settlement policy that attracted a pool of immigrants with higher levels of schooling to particular regions of Brazil in the late 19th and early 20th century. We show that municipalities that received settlements experienced increases in schooling that persisted over time. One century after the policy, localities that received state-sponsored settlements had higher levels of schooling and income per capita. We provide evidence that long-run effects were driven by persistently higher supply and use of educational inputs and shifts in the structure of occupations towards skill-intensive sectors.
    Date: 2015
  2. By: David Cuberes (Clark University); Rafael González-Val (Universidad de Zaragoza and Institut d’Economia de Barcelona)
    Abstract: This paper studies the effect of the Spanish Reconquest, a military campaign that aimed to expel the Muslims from the Iberian Peninsula, on the population of its most important cities. The almost four centuries of Reconquest offer a “quasi-natural” experiment to study the persistence of population shocks at the city level. Using a generalized difference in differences approach, we find that the Reconquest had an average significant negative effect on the relative population of the main Iberian cities even after controlling for a large set of country and city-specific geographical and economic indicators, as well as city-specific time trends. Nevertheless, our results show that this negative shock was short-lived, vanishing within the first one hundred years after the onset of the Reconquest. These results can be interpreted as weak evidence on the negative effect that war and conflict have on urban primacy. They also suggest that the locational fundamentals that determined the relative size of Iberian cities before the Reconquest were more important determinants of the fate of these cities than the direct negative impact that the Reconquest had on their population.
    Keywords: Locational Fundamentals, City Growth, Lock-in Effects, Warfare and Cities
    JEL: R12 N9
    Date: 2015–09
  3. By: Chen, Hung-Ju
    Abstract: This paper develops an overlapping generations model with endogenous retirement to examine the effect of fertility on long-run pay-as-you-go (PAYG) pensions. We find that pensions may not necessarily increase with the fertility rate. An increase in the fertility rate will raise pensions if the output elasticity of capital and the tax rate are sufficiently low, but such a change will reduce pensions if the fertility rate is sufficiently high. Our results also indicate that raising the fertility rate is more likely to reduce pensions in developing countries than in developed countries, while such a change tends to raise pensions for countries in which the costs of raising children are low.
    Keywords: Fertility; Retirement; OLG, PAYG pensions.
    JEL: H55 J13 J26
    Date: 2015–11–23
  4. By: Zuazu Bermejo, Izaskun
    Abstract: This paper investigates whether the effect of political institutions on sectoral economic performance is determined by the level of technological development of industries. Building on previous studies on the linkages among political institutions, technology and economic growth, we employ the dynamic panel Generalized Method of Moments (GMM) estimator for a sample of 4,134 country-industries from 61 industries and 89 countries over the 1990-2010 period. Our main findings suggest that changes of political institutions towards higher levels of democracy, political rights and civil liberties enhance economic growth in technologically developed industries. On the contrary, the same institutional changes might retard economic growth of those industries that are below a technological development threshold. Overall, these results give evidence of a technologically conditioned nature of political institutions to be growth-promoting.
    Keywords: political, development, develogical, dynamic, panel, institutions, technological, data
    JEL: H70 O10 O43 P16 C23
    Date: 2015–10
  5. By: Kodila-Tedika, Oasis; Asongu, Simplice
    Abstract: This study assesses the relationship between tribalism (the tribalism index) and government effectiveness (per the World Bank) in 65 countries using cross-sectional data averages from 2000-2010. This study finds that countries with high-tribal populations generally enjoy bad governance in terms of government ineffectiveness. Government ineffectiveness and tribalism are found to mutually reinforce each other in a robust relationship.
    Keywords: Institutions, Tribalism, Government effectiveness
    JEL: D02 D73 I20 O55
    Date: 2015–06
  6. By: Asongu, Simplice; Gupta, Rangan
    Abstract: The transition from Millennium Development Goals (MDGs) to Sustainable Development Goals (SDGs) has substantially shifted the policy debate from growth to inclusive growth. In this short note, we revisit the trust-growth nexus by exploiting a dataset on quality of growth (QG), recently made available to the scientific community. The empirical evidence is based on interactive contemporary and non-contemporary quantile regressions. Inequality and human development modifying variables are used as additional controls. The findings broadly support the positive role of trust in QG. In addition, relatively high thresholds of inequality are needed to change this positive trust-QG nexus in some distributions.
    Keywords: Trust; Inclusive Growth; Conditional Effects
    JEL: A13 I30 O40 Z13
    Date: 2015–06
  7. By: Ilya Lokshin (National Research University Higher School of Economics)
    Abstract: The paper proposes an outline for the link between two theoretical perspectives on the prerequisites of high institutional quality and long run growth. One framework is based on the tradeoff between disorder and dictatorship and introduces the notion of the institutional possibility frontier, another perspective focuses upon the role of total factor productivity as a parameter underlying long run growth. The connection between these frameworks is proposed and elaborated. The paper sheds some light on the nature of total factor productivity and designates the directions for further research on fundamental conditions of high-quality development
    Keywords: total factor productivity, institutional possibility frontier, social capital
    JEL: E02 Y90
    Date: 2015
  8. By: Cárcamo-Díaz, Rodrigo; Pineda Salazar, Ramón (Comisión Económica para América Latina y el Caribe (CEPAL) United Nations)
    Abstract: Using a new database of quarterly data for 21 countries of Latin America and the Caribbean for the 1990-2012 period, this document shows that the duration of GDP contractions appears to be a rather robust indicator of real volatility, and is negatively correlated with long run growth in Latin America and the Caribbean during the period. These results are consistent with different theoretical hypotheses in the literature that relate the duration of GDP contractions with economic growth. They also show that the relationship between real volatility and economic growth in the region is robust to the inclusion of external variables that control for external uncertainty and volatility.
    Date: 2014–12

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