nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒04‒09
twelve papers chosen by
Marc Klemp
Brown University

  1. The Macrogenoeconomics of Comparative Development By Quamrul H. Ashraf; Oded Galor
  2. Population Diversity, Division of Labor and Comparative Development By Emilio Depetris-Chauvin; Ömer Özak
  3. Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Pre-Industrial Economy By David de la Croix; Matthias Doepke; Joel Mokyr
  4. Dynastic Altruism, Population Growth, and Economic Prosperity By Bharat Diwakar; Gilad Sorek
  5. Endogenous Growth, Green Innovation and GDP Deceleration in a World with Polluting Production Inputs By Kerstin Burghaus; Peter Funk
  6. Corruption, Inequality and Economic Growth By Ambar, Rabnawaz
  7. Human-Capital Spillover, Population, and Economic Growth By Bharat Diwakar; Gilad Sorek
  8. Life-Cycle Saving, Bequests, and the Role of Population in R&D-based Growth By Bharat Diwakar; Gilad Sorek
  9. Business Cycles and Growth By Michaël Assous; Muriel Dal-Pont Legrand; Harald Hagemann
  10. The role of production factor quality and technology diffusion in 20th century productivity growth. By A. Bergeaud; G. Cette; R. Lecat
  11. Aid, institutions and economic growth: Heterogeneous parameters and heterogeneous donors By Wako, Hassen
  12. Sub-national Tax Policy and State Level Growth Dynamics: Evidence from U.S. States By William Gbohoui (Sans nom); François Vaillancourt

  1. By: Quamrul H. Ashraf (Williams College); Oded Galor (Brown University)
    Abstract: A vibrant literature has emerged in recent years to explore the influences of human evolution and the genetic composition of populations on the comparative economic performance of societies, highlighting the roles played by the Neolithic Revolution and the prehistoric "out of Africa" migration of anatomically modern humans in generating worldwide variations in the composition of genetic traits across populations. The recent attempt by Nicholas Wade's "A Troublesome Inheritance: Genes, Race and Human History" to expose the evolutionary origins of comparative economic development to a wider audience provides an opportunity to review this important literature in the context of his theory.
    Keywords: Comparative development, natural selection, human evolution, Malthusian era, Neolithic Revolution, genes, race
    JEL: O11 N10 N30 Z10
    Date: 2016–03
  2. By: Emilio Depetris-Chauvin (Pontificia Universidad Católica de Chile); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the emergence and prevalence of economic specialization and trade in pre-modern societies. It advances the hypothesis, and establishes empirically that population diversity had a positive causal effect on economic specialization and trade. Based on a novel ethnic level dataset combining geocoded ethnographic, linguistic and genetic data, this research exploits the exogenous variation in population diversity generated by the ``Out-of-Africa'' migration of anatomically modern humans to causally establish that higher levels of population diversity were conducive to economic specialization and the emergence of trade-related institutions that, in turn, translated into pre-modern era differences in comparative development. Additionally, this research provides suggestive evidence that regions historically inhabited by pre-modern societies with high levels of economic specialization have higher levels of contemporary occupational heterogeneity, economic complexity and development.
    Keywords: Economic Specialization, Division of Labor, Trade, Comparative Development, Economic Development, Population Diversity, Population Heterogeneity, Genetic Diversity, Linguistic Diversity, Diversity, Persistence, Out of Africa, Serial Founder Effect
    JEL: D74 F10 F14 N10 O10 O11 O12 O40 O43 O44 O47 O49 Z10
    Date: 2016–04
  3. By: David de la Croix; Matthias Doepke; Joel Mokyr
    Abstract: In the centuries leading up to the Industrial Revolution, Western Europe gradually pulled ahead of other world regions in terms of technological creativity, population growth, and income per capita. We argue that superior institutions for the creation and dissemination of productive knowledge help explain the European advantage. We build a model of technological progress in a pre-industrial economy that emphasizes the person-to-person transmission of tacit knowledge. The young learn as apprentices from the old. Institutions such as the family, the clan, the guild, and the market organize who learns from whom. We argue that medieval European institutions such as guilds, and specific features such as journeymanship, can explain the rise of Europe relative to regions that relied on the transmission of knowledge within extended families or clans.
    JEL: E02 J24 N10 N30 O33 O43
    Date: 2016–03
  4. By: Bharat Diwakar; Gilad Sorek
    Abstract: We show that non-linear dynastic altruism toward future generations yields non-monotonic relation between population growth and economic prosperity, which is polynomial in general. The exact shape of this non-monotonic relation depends on the concavity of parental altruistic utility. Hence, this work contributes to the recent line of modified R&D-based growth models, aimed to align theory with empirical evidence on non-linear relation between population growth and economic prosperity.
    Keywords: Dynastic Altruism; Population Growth; Technological Progress
    JEL: O31 O40
    Date: 2016–03
  5. By: Kerstin Burghaus; Peter Funk
    Abstract: We study economic growth and pollution control in a model with endogenous rate and direction of technical change. Economic growth results from growth in the quantity and productivity of polluting intermediates. Pollution can be controlled by reducing the pollution intensity of a given quantity through costly research (green innovation) and by reducing the share of polluting intermediate quantity in GDP. Without clean substitutes, saving on polluting inputs implies that the rate of GDP growth remains below productivity growth (deceleration). While neither green innovation nor deceleration is chosen under laissez-faire, both contribute to long-run optimal pollution control for reasonable parameter values.
    Keywords: Endogenous Growth, Direction of Technical Change, Pollution, Green Innovation, Rebound Effect
    JEL: O30 O41 O44 Q55
    Date: 2016–02–01
  6. By: Ambar, Rabnawaz
    Abstract: Corruption is worst curse of social system, which ruins all values of community and derails badly. It causes inequality in the whole chain, due to which some parties get too much profit, while other becomes miserable, leading to several street crimes as well as moral devaluations. Due to corruption and inequality, the economic growth is poorly affected, leading to imbalance in the society, causing lack of demand in the market, opportunities of labor and misbehavior of customers. Public can not avail proper advantages of capital movement in the society, and there is no proper regulation of taxation, due to that economic growth also become stuck at low levels.
    Keywords: Corruption, inequality, economic growth, society, tax
    JEL: A1 D8 D80
    Date: 2015
  7. By: Bharat Diwakar; Gilad Sorek
    Abstract: We study two-sector R&D model with endogenous human capital accumulation. Allowing for fractional human capital spillover from parents to their o¤spring, which are subject to congestion in fertility rate, we establish non-monotonic relations between population growth and economic growth. These non-monotonic relations, which are polynomial in general, are determined by the base level of human capital spillover and the magnitude of the congestion e¤ect: a U shape relation can arise under low congestion factor, whereas a hump shape may present for high congestion factor.
    Keywords: Innovation-Based Growth; Population Growth; Human-Capital Spillover
    JEL: O31 O40
    Date: 2016–03
  8. By: Bharat Diwakar; Gilad Sorek
    Abstract: This study shows how the two alternative saving motives, life-cycle consumption smoothing and parental bequests, determine the relation between population growth and R&D-based economic growth, i.e. the sign of the "weak scale-effect". We take a textbook R&D-based growth model of infinitely living agents with no weak-scale effect, and analyze it in an Overlapping Generations framework - with and without bequest saving-motive. We show how the different saving motives determine the relation between population growth and per-capita income growth, which proves to be ambiguous in general, and may also be non-monotonic. Hence, we conclude that the counterfactual weak-scale effect that is present in the second and third generations of R&D-based growth models of infinitely-living agents depends on their specific demographic structure, and thus is not inherent to R&D-based growth theory itself.
    Keywords: R&D-based Growth, Weak Scale Effect, Overlapping Generations
    JEL: O31 O40
    Date: 2016–03
  9. By: Michaël Assous (PHARE; University of Paris 1); Muriel Dal-Pont Legrand (GREDEG CNRS; Université Nice Sophia Antipolis); Harald Hagemann (University of Hohenheim, Stuttgart)
    Keywords: Business cycle, growth
  10. By: A. Bergeaud; G. Cette; R. Lecat
    Abstract: 20th century growth has been an exceptional period in the history of mankind, relying mostly on increase in total factor productivity (TFP). Using a 1890-2013 17-OECD country database, this paper improves the measurement of TFP by taking into account production factor quality, i.e. the education level of the working-age population for labor and the age of equipment for the capital stock. However, our main contribution is to assess the role of technology diffusion to TFP growth through two emblematic general purpose technologies, electricity and information and communication technologies (ICT). Using both growth decomposition methodology and instrumental variables estimates, this paper finds that, among factor quality, education levels have posted the largest contribution to growth, while the age of capital has a significant, although limited, contribution. Quality-adjusted production factors explain less than half of labor productivity growth in the largest countries but Japan, where capital deepening posted a very large contribution. As a consequence, the “one big wave” of productivity growth (Gordon, 1999), as well as the ICT productivity wave for the countries which experienced it, remains only partially explained by quality-adjusted factors, although education and technology diffusion contribute to explain the US earlier wave in the 1930s-1940s. Finally, technology diffusion, as captured through our two general purpose technologies, leaves between 0.6 and 1 point of yearly growth, as well as a large share of the two 20th century technology waves, unexplained. These results support both a significant lag in the diffusion of general purpose technologies and a wider view on growth factors, encompassing changes in the production process, management techniques or financing practices.
    Keywords: Productivity, Total factor productivity, Education, Technological Change, Technology diffusion, Global History.
    JEL: N10 O47 E20
    Date: 2016
  11. By: Wako, Hassen (UNU-MERIT)
    Abstract: Aid effectiveness has been a subject of long-sustained debate. This study contributes to this debate using panel data from 43 Sub-Saharan African countries. Its novelty lies in assessing the intermediary role of institutional quality between aid and growth, and in taking a disaggregated view of aid (at the level of a donor). Using estimation techniques which allow for recipient-specific (slope) parameters and suit the context of non-stationary and cross-sectionally dependent panels, the study finds that the relationship between aid and growth is characterised by heterogeneous (or recipient-specific) short-run parameters but a shared long-run coefficients. In the long-run, the direct growth effect of (aggregate) aid from 'traditional' donors is robustly non-positive, and the indirect effect is negative and robust to different specifications. Disaggregation reveals that there is heterogeneity in aid-effectiveness from the donor side as well: there are cases of 'good' aid (four donors), 'bad' aid (ten donors), 'neutral' aid (three donors) as well as cases where the total effect of aid is 'indeterminate' (four donors). With a lesser confidence, attributed to smaller sample size and less reliable quality of data, Chinese aid to Sub-Saharan Africa has a positive direct growth effect, a negative institutional effect, and thus an indeterminate total effect. The short-run relationships are generally not robust to alternative specifications. Comparison of the behaviour of donors with differing degrees of aid-effectiveness suggests that the future of aid would benefit more from focusing on its quality than quantity. In particular, two quality aspects - reduced fragmentation (or better specialisation) and better donor alignment (with recipient country's policy and system) - deserve much more attention.
    Keywords: aid, development aid, economic development, economic growth, institutions, donor countries, recipient countries, beneficiaries, heterogeneity, donor/recipient heterogeneity, aid effectiveness
    JEL: F35 O43 F43
    Date: 2016–02–16
  12. By: William Gbohoui (Sans nom); François Vaillancourt
    Abstract: To understand the role of subnational tax policies in explaining regional growth, we present stylized facts on U.S. state income and state-level tax policies. We use real Gross State Products (GSP) as the indicator of economic performance in contrast to the existing literature, which relies on Personal Income. The results reveal an increase in per capita income disparities, and time - persistent differences in human capital and physical capital between U.S. states. In addition, we find that subnational tax policies vary widely between states. Using augmented Barro regressions, we show that educational attainment, and state-level tax policies are the key determinants in explaining the differences between state-level economic growth. More precisely, higher corporate income or general sales taxes significantly retard economic growth, while human capital positively impacts state-level growth.
    Keywords: Regional growth, state and local taxation,
    JEL: H71 R11
    Date: 2016–03–29

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