nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒03‒29
seventeen papers chosen by
Marc Klemp
Brown University

  1. Three-generation Mobility in the United States, 1850-1940: The Role of Maternal and Paternal Grandparents By Claudia Olivetti; M. Daniele Paserman; Laura Salisbury
  2. Migrants, Ancestors, and Investments By Konrad B. Burchardi; Thomas Chaney; Tarek A. Hassan
  3. Violence Against Women: A Cross-cultural Analysis for Africa By Alberto Alesina; Benedetta Brioschi; Eliana La Ferrara
  4. What Made Great Britain so Great? From the Fiscal-Military State to the First Industrial Revolution By Jordan Roulleau-Pasdeloup
  5. Human Capital Investment, Inequality and Economic Growth By Kevin M. Murphy; Robert H. Topel
  6. Pensions, Education, and Growth: A Positive Analysis By Tetsuo Ono; Yuki Uchida
  7. The Evolution of Gender Gaps in Industrialized Countries By Claudia Olivetti; Barbara Petrongolo
  8. On The Transmission of Continuous Cultural Traits By Cheung, Man-Wah; WU, JIABIN
  9. Historical urban growth in Europe (1300–1800) By Rafael González-Val
  10. Complex dynamics in an OLG model of growth with inherited tastes By Luciano, Fanti; Luca, Gori; Cristiana, Mammana; Elisabetta, Michetti
  11. From endogenous growth to stationary state: The world economy in the mathematical formulation of the Ricardian system By Salvadori, Neri; Signorino, Rodolfo
  12. Causality between credit depth and economic growth: Evidence from 24 OECD countries By Stolbov, Mikhail
  13. Sources of Canadian Economic Growth By Samira Hasanzadeh; Hashmat U. Khan
  14. Government Expenditure and Economic Growth in Nigeria: A Cointegration and Error Correction Modeling By Usman, Ojonugwa; Agbede, Esther Abdul
  15. Growth, Urbanization and Poverty Reduction in India By Gaurav Datt; Martin Ravallion; Rinku Murgai
  16. Public debt and economic growth: Economic systems matter By Ahlborn, Markus; Schweickert, Rainer
  17. Growth agglomeration effects in spatially interdependent Latin American regions By Carolina Guevara

  1. By: Claudia Olivetti (Boston College; NBER); M. Daniele Paserman (Boston University; NBER); Laura Salisbury (York University; NBER)
    Abstract: This paper estimates intergenerational elasticities across three generations in the United States in the late 19th and early 20th centuries. We extend the methodology in Olivetti and Paserman (2015) to explore the role of maternal and paternal grandfathers for the transmission of economic status to grandsons and granddaughters. We document three main findings. First, grandfathers matter for income transmission, above and beyond their e↵ect on fathers’ income. Second, the socio-economic status of grandsons is influenced more strongly by paternal grandfathers than by maternal grand- fathers. Third, maternal grandfathers are more important for granddaughters than for grandsons, while the opposite is true for paternal grandfathers. We present a model of multi-trait matching and inheritance that can rationalize these findings.
    Keywords: Intergenerational Mobility, Multiple Generations, Gender, Marriage, Assortative Mating
    JEL: J62 J12
    Date: 2016–01–01
  2. By: Konrad B. Burchardi; Thomas Chaney; Tarek A. Hassan
    Abstract: We use 130 years of data on historical migrations to the United States to show a causal effect of the ancestry composition of US counties on foreign direct investment (FDI) sent and received by local firms. To isolate the causal effect of ancestry on FDI, we build a simple reduced-form model of migrations: migrations from a foreign country to a US county at a given time depend on (i) a push factor, causing emigration from that foreign country to the entire United States, and (ii) a pull factor, causing immigration from all origins into that US county. The interaction between time-series variation in country-specific push factors and county-specific pull factors generates quasi-random variation in the allocation of migrants across US counties. We find that a doubling of the number of residents with ancestry from a given foreign country relative to the mean increases by 4.2 percentage points the probability that at least one local firm invests in that country, and increases by 31% the number of employees at domestic recipients of FDI from that country. The size of these effects increases with the ethnic diversity of the local population, the geographic distance to the origin country, and the ethno-linguistic fractionalization of the origin country.
    JEL: F21 G15 J61 L14 N3 O11
    Date: 2016–01
  3. By: Alberto Alesina; Benedetta Brioschi; Eliana La Ferrara
    Abstract: Using a new dataset, we investigate the determinants of violence against women in Africa. We focus on cultural factors arising from pre-colonial customs and find evidence consistent with two hypotheses. First, ancient socioeconomic conditions determine social norms about gender roles, family structures and intrafamily violence which persist even when the initial conditions change. Norms about marriage patterns, living arrangements and the productive role of women are associated with contemporary violence. Second, women’s contemporary economic role affects violence in a complex way which is itself related to traditional norms in ancient times and current bargaining power within the marriage.
    JEL: E62
    Date: 2016–01
  4. By: Jordan Roulleau-Pasdeloup
    Abstract: Recent research in economic history casts doubts on the role played by good economic institutions in Great Britain after the 1688 Glorious Revolution. What undoubtedly emerged from the latter is a strong Fiscal-Military state under the influence of a Parliament dominated by Whigs. After presenting related empirical evidence, I develop a parsimonious model to understand how the influence of a strong military apparel on international trade can foster the implementation of more productive technologies. When this is the case, development by one country can foster de-industrialization for its trading partners, as has been the case historically in India during the 19th century.
    Keywords: Industrial Revolution; Productivity; Conflict; Imperialism
    JEL: N13 O14 O41 F51 F54
    Date: 2016–02
  5. By: Kevin M. Murphy; Robert H. Topel
    Abstract: We treat rising inequality is an equilibrium outcome in which human capital investment fails to keep pace with rising demand for skills. Investment affects skill supply and prices on three margins: the type of human capital in which to invest; how much to acquire; and the intensity of use. The latter two represent the intensive margins of human capital acquisition and utilization. These choices are substitutes for the creation of new skilled workers, yet they are complementary with each other, magnifying inequality. When skill-biased technical change drives economic growth, greater inequality reduces growth.
    JEL: D2 D24 D31 D33 J24 J31
    Date: 2016–01
  6. By: Tetsuo Ono (Graduate School of Economics, Osaka University); Yuki Uchida (Graduate School of Economics, Osaka University)
    Abstract: This study presents an overlapping generations model to capture the nature of the competition between generations regarding two redistribution policies, public education and public pensions. From a political economy viewpoint, we investigate the effects of population aging on these policies and economic growth. We show that greater longevity results in a higher pension-to-GDP ratio. However, an increase in longevity produces an initial increase followed by a decrease in the public education- to-GDP ratio. This, in turn, results in a hump-shaped pattern of the growth rate.
    Keywords: economic growth; population aging; public education; public pen-sions
    JEL: D78 E24 H55
    Date: 2014–12
  7. By: Claudia Olivetti; Barbara Petrongolo
    Abstract: Women in developed economies have made major inroads in labor markets throughout the past century, but remaining gender differences in pay and employment seem remarkably persistent. This paper documents long-run trends in female employment, working hours and relative wages for a wide cross-section of developed economies. It reviews existing work on the factors driving gender convergence, and novel perspectives on remaining gender gaps. The paper finally emphasizes the interplay between gender trends and the evolution of the industry structure. Based on a shift-share decomposition, it shows that the growth in the service share can explain at least half of the overall variation in female hours, both over time and across countries.
    JEL: E24 J16 J31
    Date: 2016–01
  8. By: Cheung, Man-Wah; WU, JIABIN
    Abstract: This paper generalizes the discrete cultural transmission model proposed by Bisin and Verdier (2001) to continuous trait space. The resulting cultural evolutionary dynamic can be characterized by a continuous imitative dynamic in a population game in which a player's payoff is equal to the aggregate cultural intolerance he has towards other agents. We show that cultural heterogeneity is always preserved. In addition, we model each agent's cultural intolerance towards another agent as an increasing function of cultural distance --- the distance between that other agent's trait and his own trait in the trait space. This captures people's general tendencies of evaluating culturally more distant people with stronger biases, and it is most easily modeled on a continuous trait space. We find that the curvature of the cultural intolerance function plays an important role in determining the long-run cultural phenomena. In particular, when cultural intolerance is a convex function of cultural distance, only the most extremely polarized state is a stable limit point.
    Keywords: Cultural transmission, Continuous trait space, Cultural evolution, Imitative Dynamic, Polarization
    JEL: A14 C72 C73 D10 Z13
    Date: 2016–03–09
  9. By: Rafael González-Val (Universidad de Zaragoza & IEB)
    Abstract: This paper analyses the evolution of the European urban system from a long-term perspective (from 1300 to 1800) considering the historical data set of Bairoch et al. (1988). Using the method recently proposed by Clauset et al. (2009), a Pareto-type city size distribution (power law) is rejected from 1300 to 1600. A power law is a plausible model for the city size distribution only in 1700 and 1800, although the log-normal distribution is another plausible alternative model that we cannot reject. Moreover, random growth of cities is rejected using parametric and non-parametric methods. The results reveal a clear pattern of convergent growth in all periods.
    Keywords: City size distribution, power law, Pareto distribution, Zipf’s law, Gibrat’s law
    JEL: C12 C14 R11 R12
    Date: 2016
  10. By: Luciano, Fanti; Luca, Gori; Cristiana, Mammana; Elisabetta, Michetti
    Abstract: The aim of this article is to study the local and global dynamics of a general equilibrium closed economy with overlapping generations and inherited tastes (aspirations). It shows that the interaction between the intensity of aspirations and the elasticity of substitution of effective consumption, affects the qualitative and quantitative long-term dynamics of the model. In addition, periodic cycles and complex features emerge. It remarkably extends the literature on endogenous fluctuations showing that: 1) in an OLG model with aspirations there exists a super-critical Neimark-Sacker bifurcation, 2) endogenous fluctuations occur even when the elasticity of substitution of effective consumption is smaller than one, thus reconciling the existence of economic cycles with empirical estimates, and 3) the interaction between aspirations and inter-temporal preferences affects the steady-state equilibrium and dynamic outcomes.
    Keywords: Aspirations; Nonlinear dynamics; Overlapping generations; Bifurcations; Business cycles
    JEL: C61 C62 C68 E32 J22 O41
    Date: 2016–03–08
  11. By: Salvadori, Neri; Signorino, Rodolfo
    Abstract: We analyze international trade in a Pasinetti-Ricardo growth model in the world economy scenario in which several small trading countries coexist and international commodity prices are determined by the interplay of supply and demand amongst them. We demonstrate that all the trading countries eventually reach the stationary state, though this process is not monotonic and the dynamics of capital and population may actually push some countries toward the stationary state and others away from it. We also use our model to assess an argument which Malthus employed in the second edition (1803) of An Essay on the Principle of Population to support a policy of agricultural protectionism.
    Keywords: Ricardo; Pasinetti; international trade; endogenous growth; world economy; stationary state.
    JEL: B12 B51 F10 O41
    Date: 2015–07–18
  12. By: Stolbov, Mikhail
    Abstract: Causality between the ratio of domestic private credit to GDP and growth in real GDP per capita is investigated in a country-by-country time-series framework for 24 OECD economies over the period 1980-–2013. The proposed threefold methodology to test for causal linkages integrates (i) lag-augmented VAR Granger causality tests, (ii) Breitung-Candelon causality tests in the frequency domain, and (iii) testing for causal inference based on a fully modified OLS (FMOLS) approach. For 12 of 24 countries in the sample, the three tests yield uniform results in terms of causality presence (absence) and direction. Causality running from credit depth to economic growth is found for the UK, Australia, Switzerland, and Greece. The findings lend no support to the view that financial development shifts from a supply-leading to demand-following pattern as economic development proceeds. The aggregate results mesh well with the current discussion on “too much finance” and disintermediation effects. However, idiosyncratic country determinants also appear significant.
    Keywords: causality, economic growth, financial development, FMOLS, frequency domain
    JEL: C22 E44 G21 O16
    Date: 2015–04–30
  13. By: Samira Hasanzadeh (Department of Economics, Carleton University); Hashmat U. Khan (Department of Economics, Carleton University)
    Abstract: We apply modern growth accounting based on the semi-endogenous growth theory of Jones (2002) to determine the sources of Canadian economic growth between 1981- 2013. This framework allows us to distinguish between transition dynamics and steady- state growth, and quantify their respective contributions. We find that over 80% of the total average growth rate of output per worker of 1.24 percentage points has been due to transitional factors. Among these, the bulk of the contribution is attributed to domestic human capital growth driven by educational attainment, and global research and development (R&D) intensity. These two factors have been the primary sources of Canadian economic growth. The growth in capital-output ratio contributed a small share of 0.14 percentage points suggesting a limited role of capital accumulation. The steady-state growth over is attributed to population growth indicating modest scale effects of about 16% of the total average growth. Our results highlight that the future of Canadian productivity growth and the standard of living are closely tied to sustained growth in both domestic human capital and global R&D intensity.
    Keywords: Modern Growth Accounting, Economic Growth
    JEL: O47 O51
    Date: 2016–03
  14. By: Usman, Ojonugwa; Agbede, Esther Abdul
    Abstract: This study examined the relationship between government expenditure and economic growth in Nigeria using a co-integration and error correction model for the period 1970-2010. A time-series data was obtained from the Central Bank of Nigeria for the analysis. The outcome of the ADF unit root test indicated that all variables included in the model were non-stationary at their levels but integrated of order one, I(1). From the long-run analysis, the results revealed a positive and significant linear relationship between the two categories of government expenditure and economic growth (measured by real GDP), whereas on the short-run, economic growth had a positive and significant linear relationship with recurrent expenditure and negative but significant relationship with capital expenditure. The result of the Pairwise Granger Causality test in a Vector Error Correction Model indicated a unidirectional (one-way) causality, running from economic growth to capital expenditure and recurrent expenditure to economic growth, while bi-directional causality runs from capital expenditure to recurrent expenditure and vice versa. Therefore, the study recommended the need to stimulate economic growth by allocating appropriate proportion to capital expenditure of government in the national budget.
    Keywords: Public Expenditure, Economic growth, Granger Causality, Cointegration, Augmented Dickey-Fuller
    JEL: O47
    Date: 2015–07–18
  15. By: Gaurav Datt; Martin Ravallion; Rinku Murgai
    Abstract: Longstanding development issues are revisited in the light of our newly-constructed dataset of poverty measures for India spanning 60 years, including 20 years since reforms began in earnest in 1991. We find a downward trend in poverty measures since 1970, with an acceleration post-1991, despite rising inequality. Faster poverty decline came with both higher growth and a more pro-poor pattern of growth. Post-1991 data suggest stronger inter-sectoral linkages: urban consumption growth brought gains to the rural as well as the urban poor and the primary-secondary-tertiary composition of growth has ceased to matter as all three sectors contributed to poverty reduction.
    JEL: I32 O15 O18 O47
    Date: 2016–02
  16. By: Ahlborn, Markus; Schweickert, Rainer
    Abstract: Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We - in accordance with recent literature - challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.
    Keywords: public debt,economic growth,economic systems,fiscal policy,welfare state
    JEL: E62 P10 P51 H10
    Date: 2016
  17. By: Carolina Guevara (Université de Lyon, Lyon F- 69007, France; CNRS, GATE L-SE, Ecully, F- 69130, France; Université J. Monnet, Saint-Etienne, F- 42000, France
    Abstract: We investigate the effect of agglomeration on regional growth in Latin America, using panel data and spatial panel data techniques. By exploring the role of development in the agglomeration-growth relationship, we find evidence of the Williamson’s hypothesis : agglomeration growth effects are magnified in less-developed regions. Moreover, we measure the spatial effects of agglomeration. They have a large geographical scope. International connections of Latin American regions are beneficial to obtain positive spatial effects of agglomeration. Nevertheless, spatial effects are stronger within countries. This finding points out the strong border effects in Latin America.
    Keywords: growth, regional data, agglomeration economies, spatial interdependence, Latin America, urbanization, development
    JEL: R11 O18 O54
    Date: 2016

This nep-gro issue is ©2016 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.