nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒04‒23
seventeen papers chosen by
Marc Klemp
Brown University

  1. "The Macrogenoeconomics of Comparative Development" By Quamrul Ashraf; Oded Galor
  2. Clans, Guilds, and Markets: Apprenticeship Institutions and Growth in the Pre-Industrial Economy By de la Croix, David; Doepke, Matthias; Mokyr, Joel
  3. State Capacity and Public Goods: Institutional Change, Human Capital, and Growth in Early Modern Germany By Dittmar, Jeremiah E.; Meisenzahl, Ralf R.
  4. The Child Quality-Quantity Tradeoff, England, 1780-1880: A Fundamental Component of the Economic Theory of Growth is Missing By Clark, Gregory; Cummins, Neil
  5. Re-estimating the Relationship between Inequality and Growth By Nathalie Scholl; Stephan Klasen
  6. Volatility and Growth with Recursive Preferences By Barbara Annicchiarico; Alessandra Pelloni; Fabrizio Valenti
  7. Explaining regional inequality from the periphery: The mexican case, 1900-2000. By José Aguilar Retureta
  8. Corruption, Inequality and Economic Growth By Ambar, Rabnawaz
  9. The Stages of Economic Growth Revisited, Part 2: Catching Up to and Joining the Economic Leader By Kehoe, Timothy J.; Costa, Daniela; Raveendranathan, Gajen
  10. Structural transformation, the mismeasurement of productivity growth, and the cost disease of services By Alwyn Young
  11. R&D, Scale Effects and Spillovers: New Insights from Emerging Countries By Luintel, Kul B; Khan, Mosahid
  12. Poverty and economic growth in Ethiopia: a multivariate causal linkage By Nyasha, Sheilla; Gwenhure, Yvonne; Odhiambo, Nicholas M
  13. Considering the effect of biomass energy consumption on economic growth:fresh evidence from BRICS region By Shahbaz, Muhammad; Ahmed, Khalid; Rasool, Ghulam; Kumar, Mantu
  14. Does the Impact of Gini Index on Growth Differ among GCC Countries ? By Sbaouelgi, Jihène; Boulila, Ghazi
  15. Economic growth and environmental pollution in Iran: evidence from manufacturing and services sectors By Mohamad Taghvaee, Vahid; Parsa, Hojat
  16. Business Cycles and Growth By Michaël Assous; Muriel Dal-Pont Legrand; Harald Hagemann
  17. What type of finance matters for growth ? Bayesian model averaging evidence By Hasan,Iftekhar; Horvath,Roman; Mares,Jan

  1. By: Quamrul Ashraf; Oded Galor
    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.
    Date: 2016
  2. By: de la Croix, David; Doepke, Matthias; Mokyr, Joel
    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
    Keywords: Apprenticeship; Clans; Dissemination of Knowledge; Guilds
    JEL: E02 J24 N10 N30 O33 O43
    Date: 2016–03
  3. By: Dittmar, Jeremiah E.; Meisenzahl, Ralf R.
    Abstract: What are the origins and consequences of the state as a provider of public goods? We study legal reforms that established mass public education and increased state capacity in German cities during the 1500s. These fundamental changes in public goods provision occurred where ideological competition during the Protestant Reformation interacted with popular politics at the local level. We document that cities that formalized public goods provision in the 1500s began differentially producing and attracting upper tail human capital and grew to be significantly larger in the long-run. We study plague outbreaks in a narrow time period as exogenous shocks to local politics and find support for a causal interpretation of the relationship between public goods institutions, human capital, and growth. More broadly, we provide evidence on the origins of state capacity directly targeting welfare improvement.
    Keywords: Education ; Growth ; Human Capital ; Institutions ; Persistence ; State Capacity
    JEL: I25 N13 O11 O25
    Date: 2016–03–15
  4. By: Clark, Gregory; Cummins, Neil
    Abstract: In recent theorizing, modern economic growth was created by substituting child quality for quantity. However evidence for this tradeoff is minimal. In England the Industrial Revolution occurred in a period 1780-1879 of substantial human capital investment, but no fertility control, huge random variation in family sizes, and uncorrelated family size and parent quality. Yet family size variation had little effect on educational attainment, occupational status, or longevity, for both prosperous and poor families. More children reduced inherited wealth, but even that effect largely disappeared by the next generation. There is no quality-quantity tradeoff. Growth theory must proceed in other directions.
    Keywords: Economic Growth; Human Capital; Quality-Quantity Tradeoff
    Date: 2016–04
  5. By: Nathalie Scholl (Georg-August University Göttingen); Stephan Klasen (University of Göttingen)
    Abstract: In this paper, we revisit the inequality-growth relationship using an enhanced panel data set with improved inequality data and special attention to the role of transition countries. We base our analysis on the specification of Forbes (2000), but also address the functional form concerns raised by Banerjee and Duflo (2003). We arrive at three main findings: First, similar to Forbes we find a significant positive association between inequality and subsequent economic growth in the full sample, but this is entirely driven by transition (post-Soviet) countries. Second, this positive relationship in transition countries is not robust to the inclusion of separate time effects. Lastly, it therefore appears that this association is not causal but rather driven by the particular dynamics of the transition. Our finding is consistent with the claim that the relationship between inequality and growth emerges due to the particular timing of inequality and growth dynamics in transition countries. In particular, the rise in inequality in the 1990s coincided with a sharp output collapse, leading us to find an association between the large increase in inequality in the early 1990 and a growth recovery in the late 1990s. In sum, once the transition country dynamics are accounted for, we find no robust, systematic relationship between inequality and subsequent growth, neither for levels nor for changes in inequality. These results hold for different lag structures as well as in the medium- rather than the short term, and the empirical patterns observed are robust to the use of different data sets on inequality.
    Keywords: Inequality; Growth; Transition Countries; Dynamic Panel
    JEL: O11 O15 O40 E25
    Date: 2016–04–14
  6. By: Barbara Annicchiarico (Department of Economics and Finance, University of Rome Tor Vergata, Italy); Alessandra Pelloni (Department of Economics and Finance, University of Rome Tor Vergata, Italy; The Rimini Centre for Economic Analysis, Italy); Fabrizio Valenti (Save the Children International, Freetown, Sierra Leone)
    Abstract: This paper studies the relationship between volatility and long-run growth in a complete market economy with human capital accumulation and Epstein-Zin preferences. There is both cross-country and time-series evidence that volatility is associated with lower growth. Matching this evidence has proved a challenge for growth models with no market failures as they tend to predict the opposite for values of risk aversion higher than unity. However in our model, risk aversion and intertemporal elasticity of substitution are allowed to move independently of each other, and when both are relatively high or relatively low, the relationship between volatility and growth is negative. Indeed this is the case for parametrizations of preferences in line with the literature.
    Date: 2016–04
  7. By: José Aguilar Retureta (Universitat de Barcelona, Spain)
    Abstract: Economic Historians have paid close attention to the long term evolution of regional inequality. Nevertheless, so far research has largely focused on industrialised economies, neglecting to a large extent the experience of low- and middle-income countries. This paper aims to provide, using a new regional labour productivity database, evidence on the determinants of regional income inequality changes in Mexico from 1900 to the present. Different forces have driven regional inequality in each historical period. During the primary-export led-growth period of the first globalization (1900-1930) differences across regions in the intensity of structural change caused an increasing divergence. From 1930 to 1980, during the State-led Industrialisation, internal migrations contributed to a strong process of regional convergence in productivity, both in the within and the between-sector components of regional inequality. Finally, the increasing regional divergence that has taken place from 1980 onwards has been mainly an effect of the operation of labour productivity differentials within each sector.
    Keywords: Economic History, Economic Growth, Regional Income Inequality, Mexico.
    JEL: N16 N96 R11
    Date: 2016–03
  8. 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
  9. By: Kehoe, Timothy J. (Federal Reserve Bank of Minneapolis); Costa, Daniela (Federal Reserve Bank of Minneapolis); Raveendranathan, Gajen (Federal Reserve Bank of Minneapolis)
    Abstract: Rostow (1960) hypothesized that taking off into economic growth was a difficult task for countries in the 19th century, requiring major changes in institutions. In the 20th century, however, as the United States and other advanced countries became richer because of improvements in technologies and managerial practices, it became easier for poor countries to take off into rapid growth by adopting some of these improvements. {{p}} We hypothesize that, while taking off is now easier, the difficult transition is now from take-off to catch-up, where nations grow closer to the economic leader (now the United States). Doing so often requires major reforms in policies and institutions. Data suggest that when countries reach the limits imposed by their policies and institutions, their growth slows sharply. Even countries like Japan that have joined the United States in economic leadership in defining best practice in some sectors lag behind in other sectors. Our theory suggests that China is currently reaching its limits to rapid growth.
    Date: 2016–04–12
  10. By: Alwyn Young
    Abstract: If workers self-select into industries based upon their relative productivity in different tasks, and comparative advantage is aligned with absolute advantage, then the average efficacy of a sector's workforce will be negatively correlated with its employment share. This might explain the difference in the reported productivity growth of contracting goods and expanding services. Instrumenting with defense expenditures, I find the elasticity of worker efficacy with respect to employment shares is substantially negative, albeit imprecisely estimated. The estimates suggest that the view that goods and services have similar productivity growth rates is a plausible alternative characterization of growth in developed economies.
    JEL: E23 E24 H56 J24 O41 O47
    Date: 2014–11
  11. By: Luintel, Kul B (Cardiff Business School); Khan, Mosahid
    Abstract: There has been a concomitant rise in R&D and the rate of economic growth in emerging countries. Analyzing a panel of 31 emerging countries, we find convincing evidence of scale effects which make government policies potent for long-run growth. This contrasts sharply with the well known findings of Jones (1995a). Innovations show increasing returns to knowledge stock, implying that the diminishing returns assumed by some semi-endogenous growth models might not be generalized. International R&D spillovers raise the innovation bar. The observed growth rates of emerging economies appear in transition therefore their growth rates may recede with the passage of time.
    Keywords: Scale Effects; Ideas Production; Diffusion; Panel Integration and Cointegration
    JEL: O3 O4 O47
    Date: 2016–04
  12. By: Nyasha, Sheilla; Gwenhure, Yvonne; Odhiambo, Nicholas M
    Abstract: This paper investigates the dynamic causal linkage between poverty reduction and economic growth in Ethiopia during the period from 1970 to 2014. To address the omission of variable bias, the study includes financial development and investment as intermittent variables ??? thereby creating a multivariate Granger-causality model. The study uses two proxies to measure the level of poverty in Ethiopia, namely: household consumption expenditure and infant mortality rate. Using the newly developed ARDL bounds testing approach to cointegration and the ECM-based causality model, the study finds that there is short-run bidirectional causality between economic growth and poverty reduction ??? irrespective of which variable is used as a proxy for poverty reduction. However, in the long run, the study finds unidirectional causality from economic growth to poverty reduction; but it fails to find any causal relationship between household consumption expenditure and economic growth. The study therefore concludes that while poverty reduction and economic growth are mutually beneficial in the short run; in the long run, it is economic growth that leads to poverty reduction when infant mortality rate is used as a proxy for poverty reduction.
    Keywords: Ethiopia, Poverty, Economic Growth, Granger-Causality
    Date: 2016–03
  13. By: Shahbaz, Muhammad; Ahmed, Khalid; Rasool, Ghulam; Kumar, Mantu
    Abstract: This paper investigates the relationship between biomass energy consumption and economic growth by incorporating capital and trade openness in production function for the case of BRICS countries. In doing so, unit root and cointegration tests have been used in order to examine unit root properties and long run relationship between the series for the period of 1991Q1-2015Q4. The results confirm the presence of long-run equilibrium relationship between the variables. Moreover, biomass energy consumption stimulates economic growth. Capital increments economic growth and trade openness spurs economic growth. The feedback effect exists between biomass energy consumption and economic growth. Trade openness Granger causes economic growth, capital and biomass energy consumption. The policy to adopt biomass as the primary source of renewable energy helps BRICS countries to achieve sustainable development goal in both short-run and long-run. However, the key innovative point of this study is to establish the sign for Granger causality test.
    Keywords: Biomass energy, Growth, Capital, Trade
    JEL: C0
    Date: 2016–03–12
  14. By: Sbaouelgi, Jihène; Boulila, Ghazi
    Abstract: This paper tests whether inequality and economic growth in eleven Gulf Cooperation Council (GCC) countries are cointegrated, and estimates the impact of inequality on growth in each country separately in case cointegration exists. Assuming that each country has its own inequality-growth relationship, the paper uses time series data to estimate the impact of inequality on growth individually in each GCC country by making use of single equation cointegration techniques robust to small sample sizes such as dynamic ordinary least squares (DOLS), fully modified ordinary least squares (FMOLS) and canonical cointegration regression (CCR). Results show that the impact of inequality on growth differs among GCC countries. The paper is valuable to policy makers in GCC countries, especially the Arab Spring countries, who aim to achieve higher growth rates by improving income inequality. The paper shows whether measures aimed at ameliorating income distribution will positively or negatively affect economic growth.
    Keywords: Gulf Cooperation Council countries (GCC), Economic growth; income inequality; Cointegration; Unit root tests
    JEL: C23 C26 O11 O15 O53
    Date: 2016–02–15
  15. By: Mohamad Taghvaee, Vahid; Parsa, Hojat
    Abstract: This article aims to answer the question of whether the manufacturing (and mining) and services sectors in Iran should be reconstructed or grown as before, in order to improve the environmental quality. The global warming, if not global burning, is a dire warning about environmental pollution dangers to everyone, living on the Earth. In this field, Iran is a good candidate due to its significantly high share of CO2 emissions in proportion to the low share of economic growth in the world which can be remedied by economic growth, based on Environmental Kuznets Hypothesis (EKH). We employ the Auto-Regressive Distributed Model (ARDL) to examine the long run equilibrium relationship between CO2 emission and economic growth. The results show that, regarding EKC, the nexus of CO2 emissions and economic growth in either sector is in a sharply ascending phase. It implies that if manufacturing (and mining) and services sectors inflate, the quality of environment will decline owing to the intensive and pollutant energy-using structures. Thus, rather than growing, they should be reconstructed by importing cleaner and more efficient technologies and developing internal inventions.
    Keywords: Environment. Manufacturing. Services.
    JEL: Q5
    Date: 2015
  16. 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
  17. By: Hasan,Iftekhar; Horvath,Roman; Mares,Jan
    Abstract: This paper examines the effect of finance on long-term economic growth using Bayesian model averaging to address model uncertainty in cross-country growth regressions. The literature largely focuses on financial indicators that assess the financial depth of banks and stock markets. These indicators are examined jointly with newly developed indicators that assess the stability and efficiency of financial markets. Once the finance-growth regressions are subjected to model uncertainty,the results suggest that commonly used indicators of financial development are not robustly related to long-term growth. However, the findings from the global sample indicate that one newly developed indicator -- the efficiency of financial intermediaries -- is robustly related to long-term growth.
    Keywords: Debt Markets,Banks&Banking Reform,Economic Theory&Research,Access to Finance,Pro-Poor Growth
    Date: 2016–04–18

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