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on Economic Growth |
| By: | Depetris-Chauvin, Emilio; Özak, Ömer |
| 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: | 2016–04–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70503&r=gro |
| By: | Matthias Doepke (Northwestern University); Michele Tertilt (Universität Mannheim) |
| Abstract: | Much of macroeconomics is concerned with the allocation of physical capital, human capital, and labor over time and across people. The decisions on savings, education, and labor supply that generate these variables are made within families. Yet the family (and decision-making in families) is typically ignored in macroeconomic models. In this chapter, we argue that family economics should be an integral part of macroeconomics, and that accounting for the family leads to new answers to classic macro questions. Our discussion is organized around three themes. We start by focusing on short and medium run fluctuations, and argue that changes in family structure in recent decades have important repercussions for the determination of aggregate labor supply and savings. Next, we turn to economic growth, and describe how accounting for families is central for understanding differences between rich and poor countries and for the determinants of long-run development. We conclude with an analysis of the role of the family as a driver of political and institutional change. |
| Keywords: | families, Households, bargaining, fertility, Labor Supply, human capital, gender |
| JEL: | D13 J16 O10 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2016-010&r=gro |
| By: | Guglielmo Barone (Bank of Italy); Sauro Mocetti (Bank of Italy) |
| Abstract: | We examine intergenerational mobility in the very long run, across generations that are six centuries apart. We exploit a unique dataset containing detailed information at the individual level for all people living in the Italian city of Florence in 1427. These individuals have been associated, using their surnames, with their pseudo-descendants living in Florence in 2011. We find that earnings elasticity is about 0.04, much higher than predicted by traditional models of intergenerational mobility. We also find an even stronger role for real wealth inheritance and evidence of persistence in belonging to certain elite professions. Our results are confirmed when we account for the quality of the pseudo-links and when we address the potential selectivity bias due to the differential survival rates across surnames. We argue that the quasi-immobility of pre-industrial society and the positional advantages in the access to certain professions might explain (in part) the long-lasting effects of ancestors’ socioeconomic status. |
| Keywords: | intergenerational mobility, earnings, wealth, professions, informational content of surnames, Florence |
| JEL: | J62 N33 D31 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1060_16&r=gro |
| By: | Erich Gundlach (Universität Hamburg, Germany); Martin Paldam (Department of Economics and Business Economics, Aarhus University, Denmark) |
| Abstract: | Long-run socioeconomic transitions can be observed as stylized facts across countries and over time. For instance, poor countries have more agriculture and less democracy than rich countries, and this pattern also holds within countries for transitions from a traditional to a modern society. It is shown that the agricultural and the democratic transitions can be partly explained as the outcome of dynamic processes that are shared among countries. We identify the effects of common dynamic processes with panel estimators that allow for heterogeneous country effects and possible cross-country spillovers. Common dynamic processes appear to be in line with alternative hypotheses on the causes of socioeconomic transitions. |
| Keywords: | Long-run development, agriculture, democracy, socioeconomic transitions, mean group estimators, technology heterogeneity, cross-section independence |
| JEL: | O1 P5 Q1 |
| Date: | 2016–07–04 |
| URL: | http://d.repec.org/n?u=RePEc:aah:aarhec:2016-06&r=gro |
| By: | Joseph Stiglitz (Columbia University) |
| Abstract: | This paper analyzes equilibrium, dynamics, and optimal decisions on the factor bias of innovation in a model of induced innovation. In a model with full employment, we show that (a) if the elasticity of substitution is always less than or greater than unity, there is a unique steady state equilibrium; (b) if the elasticity of substitution is less than unity, the steady state is stable, but convergence is oscillatory; (c) if the elasticity of substitution is greater than unity, the steady state is a saddle point; and (d) if the elasticity of substitution is less than unity for both high and low effective capital labor ratios but greater than unity for intermediate values, then there can be multiple steady states. In a model where efficiency wages lead to equilibrium unemployment, we show that if the elasticity of substitution is less than unity, there will be a bias towards excessive labor augmenting innovation, resulting in too high unemployment, with convergence to the unique steady state being oscillatory, rather than monotonic. Similarly, if the elasticity of substitution between skilled and unskilled labor is less than unity, and there is efficiency wage unemployment for unskilled labor only, there is will be excessively skill-biased innovation. This paper provides an alternative resolution to the Harrod-Domar conundrum of the disparity between the natural and warranted rate of growth to that of Solow, with strong policy implications, for instance, concerning the effects of income distribution and monetary policy both in the short run and the long. |
| JEL: | E24 O30 O31 O33 |
| Date: | 2015–01 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:1&r=gro |
| By: | Guleryuz, Ece H. |
| Abstract: | This paper provides a critical examination about the effect of externally-imposed French Revolution institutions on regional economic development variations in the 19th century by focusing on the experience of France where the Revolution originated. Acemoglu et al. (2011) take advantage of the “natural experiment” provided by the imposition of French institutions on a number of German states by the invading Napoleonic armies. The argument that the differences in the long-run economic performance of German states stem from the differences in externally-imposed French and domestic German institutions needs to be investigated further. In order to achieve this purpose, first the variation in historical urbanization rates across the French departments is examined statistically. Then a difference-in-difference estimation is used to identify a treatment effect causing growth differences between border and interior departments. The proposed treatment effect is the faster industrialization due to intensified minerals mining and railway construction in north and northeast France after 1850. It is shown that the border departments experienced higher economic growth primarily after 1850 even though the Revolution institutions and reforms were imposed uniformly across the French departments. Therefore, all the variation in economic development across German polities cannot be attributed to the externally-imposed French institutions and reforms. |
| Keywords: | French Revolution, Externally-Imposed Institutions, Regional Growth Differences, Urbanization, French Departments |
| JEL: | J11 N43 N93 O43 O52 P16 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70870&r=gro |
| By: | Odilova, Shoirahon |
| Abstract: | Extant literature on the link between patent protection and economic growth have yielded inconclusive results. In this study, we aim to engage in this debate by conjecturing that intelligence moderates the effect of patent protection on economic growth. Using annual data of 88 nations from 1970 to 2013 we find that patent protection has positive effect on growth only after accounting for the interaction between IQ and IPR. Indeed, we find that the interaction term is negative and statistically significant suggesting that countries with higher level of intelligence (above 90 points) can offset the negative effect of weak IPR protection. The results remain robust for a battery of robustness tests. |
| Keywords: | IQ; intelligence; patent protection; economic growth |
| JEL: | F6 |
| Date: | 2016–04–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70842&r=gro |
| By: | Tang, Sam Hak Kan (University of Western Australia); Leung, Charles Ka Yui (City University of Hong Kong) |
| Abstract: | We present cross-country evidence that a country’s macroeconomic volatility, measured either by the standard deviation of output growth or the occurrence of trend-growth breaks, is significantly affected by the country’s historical variables. In particular, countries with longer histories of state-level political institutions experience less macroeconomic volatility in post-war periods. Robustness checks reveal that the effect of this historical variable on volatility remains significant and substantial after controlling for a host of structural variables investigated in previous studies. We also find that the state history variable is more important in countries with a higher level of macroeconomic volatility. |
| Date: | 2016–04–19 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddgw:271&r=gro |
| By: | Luis Huesca; Linda Llamas |
| Abstract: | This research provides a detailed examination of the redistributive effect achieved by the tax system including total taxes and cash transfers targeting the contributors and households in the period 2002-2008-2014 for the Mexican regions and the country. We measure the impact on income growth through the tax system according to each fiscal rules for the corresponding years using pre and post fiscal conditions. We answer the next question: considering the economic growth on per capita incomes in the Mexican States, will the impact of the Mexican tax system improve income distribution? That is, by all means pro-poor?. Our methodology allows to detect if taxes and benefits can really induce an improvement of income growth on the regions captured by its wellbeing and economic growth conditions. We outlined relevant theoretical issues on public fiscal policies concerning this work and lastly, we proceed with an empirical application. |
| Keywords: | Fiscal policy; pro-poor regional growth; redistribution; progressivity. |
| JEL: | E62 D63 I32 O12 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:lacicr:1603&r=gro |
| By: | Saracoglu, Durdane Sirin; Roe, Terry L. |
| Abstract: | Structural change or the change in the sectoral composition of output is a common component in the growth process in developing economies. Not recognized in previous models of this process is the households' choice of urban - rural residency which not only alters the demand for regionally specific goods (e.g., housing, education, health), and hence the cost of living, but also the stock of rural - urban labor and the rate of growth and structural change. We investigate the relationship between GDP growth, regional imbalances, and rural-urban migration using a neoclassical multi-region-sector growth model. The household decision for migration is dependent on the cost-of living differentials implied by the relative changes in regional home goods prices across regions as capital deepening occurs and the capital stock within each region evolves. Results show that allowing for residency choice provides a much richer explanation of the forces of structural change and growth. |
| Keywords: | Rural-urban migration, structural transformation, growth, residency choice, multi-sector modeling, general equilibrium, Community/Rural/Urban Development, Public Economics, O41, R13, R23, C61, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212690&r=gro |
| 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 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2016-05&r=gro |
| By: | Mohammed, Rezgar |
| Abstract: | This paper shows the relationship between agricultural production and the economic growth of four South American agricultural countries. Time series data were analyzed using DF GLS unit root test, ARDL approach and VECM approach to show the short run and long run relationships between variables. Results indicated a positive and significant effect of agricultural production on economic growth in Brazil, Chile and Colombia in the long run. |
| Keywords: | International Development, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:saea16:229786&r=gro |
| By: | Yu, Lerong; Li, Xiaoyun |
| Abstract: | Based on the provincial data on annual per capita net income, inequality and poverty incidence since 2000, this paper attempts to analyze the impacts of the income growth and distribution on poverty reduction in rural China and further explores changes and causes of rural income inequality by means of econometric model and Gini coefficient decomposition. The results show that the income growth of China’s peasants still plays a significant role in reducing rural poverty, but the deterioration of income inequality will partially offset the positive effects of income growth on poverty reduction; the extent of income inequality in rural areas is obviously higher than that in urban areas; income from wage and salary is one of the most important determinants which causes rural income inequality, followed by the income from household operations, but the ratio of contribution of the income from property and transfer to inequality is relatively low. |
| Keywords: | Consumer/Household Economics, International Development, |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae15:212041&r=gro |
| By: | Mark Setterfield (New School For Social Research,); Yun K. Kim (University of Massachusetts, Boston;) |
| Abstract: | We develop a neo-Kaleckian growth model that emphasizes the importance of consumption behavior. In our model, workers first make consumption decisions based on their gross income, and then treat debt servicing commitments as a substitute for saving. Workers’ borrowing is induced by their desire to keep up with the consumption standard set by rentiers’ consumption, reflecting an aspect of the relative income hypothesis. As a result of this consumption and debt servicing behavior, consumer debt accumulation and income distribution have effects on aggregate demand, profitability, and economic growth that differ from those found in existing models. We also investigate the financial sustainability of the Golden Age and Neoliberal growth regimes within our framework. It is shown that distributional changes between the Golden Age and the Neoliberal regimes, together with corresponding changes in consumption emulation behavior via expenditure cascades, suffice to make the Neoliberal growth regime unsustainable. |
| Keywords: | Consumer debt, emulation, income distribution, Golden Age regime, Neoliberal regime, expenditure cascades, growth |
| JEL: | E12 E44 O41 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:thk:wpaper:30&r=gro |
| By: | Tiago Neves Sequeira (Departamento de Gesta˜o e Economia and CEFAGE-UBI. Universidade da Beira Interior.); Pedro Mazeda Gil (University of Porto, Faculty of Economics, and CEF.UP); Oscar Afonso (University of Porto, Faculty of Economics) |
| Abstract: | We eliminate scale effects in the Balanced Growth Path of an expanding-variety endogenous growth model using the concept of entropy as a complexity effect. This allows us to gradually diminish scale effects as the economy develops along the transitional dynamics, which conciliates evidence of the existence of scale effects long ago in history with evidence for no scale effects in today’s economies. We show that empirical evidence supports entropy as a stylized form of the complexity effect. Then we show that the model can replicate well the take-off after the industrial revolution. Finally, we show that a model with both network effects (as spillovers in R&D) and entropy (as complexity effects) can replicate the main facts of the very long-run evolution of the economy since A.D. 1. Future scenarios may help to explain (part of) the growth crises affecting the current generation. |
| Keywords: | Endogenous economic growth, network effects, complexity effects, entropy. |
| JEL: | O10 O30 O40 E22 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:575&r=gro |
| By: | Miguel Martín-Retortillo (Universitat Pompeu Fabra, Spain); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragón –IA2, Spain); Jackeline Velazco (Pontificia Universidad Católica de Perú, Peru); Henry Willebald (Universidad de la República, Uruguay) |
| Abstract: | Since 1950 profound changes, such as new technological innovations or changes in agricultural and trade policies took place in the Latin American agriculture. This article aims to analyse the dynamics of the growth of Latin American agricultural production between 1950 and 2008. It explores whether the increases in agricultural production have been due to increases in the use of production factors, or whether production increases have been due to efficiency gains. Our findings suggest that efficiency gains made a rather modest contribution to the important increase in production; this increase was principally the result of the use of capital. This was the most important productive factor in explaining increases in output, together with more moderate increases in the use of land and labour. |
| Keywords: | Latin American economic history, Latin American agriculture, Agricultural productivity, Agricultural growth |
| JEL: | N56 O13 Q11 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1610&r=gro |
| By: | jovanovic, branimir (University of Turin) |
| Abstract: | This paper investigates when is there a Kuznets curve, that is, under which conditions economic growth is associated with a decline in income inequality. The analysis is done on a sample of 26 ex-socialist countries from Eastern Europe, during the post-socialist years. These countries had very similar characteristics when socialism collapsed, but very di¤erent experiences with the transition afterwards, which makes them a suitable group for analysing the relationship between GDP and in- equality. We focus on four factors that may shape this relationship - labour market institutions, market power of companies, social bene?ts and taxes. Findings suggest that inequality (before government re- distribution) declines with economic growth when labour markets are more regulated, anti-monopoly policy is more exective and taxes are higher. Taxes seem to be the single most important factor. |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:201550&r=gro |
| By: | Viktor Stojkoski; Zoran Utkovski; Ljupco Kocarev |
| Abstract: | Economic complexity reflects the amount of knowledge that is embedded in the productive structure of an economy. By combining tools from network science and econometrics, a robust and stable relationship between a country's productive structure and its economic growth has been established. Here we report that not only goods but also services are important for predicting the rate at which countries will grow. By adopting a terminology which classifies manufactured goods and delivered services as products, we investigate the influence of services on the country's productive structure. In particular, we provide evidence that complexity indices for services are in general higher than those for goods, which is reflected in a general tendency to rank countries with developed service sector higher than countries with economy centred on manufacturing of goods. By focusing on country dynamics based on experimental data, we investigate the impact of services on the economic complexity of countries measured in the product space (consisting of both goods and services). Importantly, we show that diversification of service exports and its sophistication can provide an additional route for economic growth in both developing and developed countries. |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1604.06284&r=gro |
| By: | Díaz-Giménez, Javier; Kirkby, Robert |
| Abstract: | Between 1960 and 2013, in the United States the inflation rate was essentially proportional to the growth rate of money in the long run, but that relationship did not hold in the short run. We ask whether three standard monetary model economies from the Cash-in-Advance, the New-Keynesian, and the Search-Money frameworks replicate these two facts. We find that all three deliver the first fact, but that they fail to deliver the second fact, since in all three of them the inflation rate is proportional to the growth rate of money both in the long run and in the short run. This is because in all three model economies the price level responds too quickly to changes in the growth rate of money. |
| Keywords: | Monetary Economics, Quantity Theory of Money, Cash-in-Advance, New-Keynesian, Search-Money, |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:5047&r=gro |
| By: | Yekaterina Chzhen; Sudhanshu Handa; Emilia Toczydlowska; UNICEF Innocenti Research Centre |
| Abstract: | While a long-standing literature analyses cross-country variation in the incidence of child poverty in rich countries in a single year, less is known about children’s individual movements into and out of low household income over a period of time. Using longitudinal data from the European Union Statistics on Income and Living Conditions (EU-SILC), the present study addresses this gap by analysing both income mobility and child poverty dynamics in the EU during the recent economic crisis. It finds that income growth among children has been generally pro-poor but not sufficiently so to put a brake on the increasing income inequality. There is substantial heterogeneity among the EU-SILC countries in the rates of child poverty entry and exit. Scandinavian countries tend to combine lower exit and entry rates, while Southern and Eastern European countries tend to have higher rates of both poverty exit and entry. |
| Keywords: | child poverty; household surveys; income distribution; |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ucf:inwopa:inwopa840&r=gro |
| By: | Hein, Eckhard |
| Abstract: | Starting from a review of the main strands of orthodox and heterodox distribution and growth models and their distinguishing features, with the post-Kaleckian Bhaduri/Marglin (1990) (and Kurz 1990) model as a specific, but highly flexible variant of heterodox distribution and growth theories, we develop a simple modelling framework in which we can treat these different theories as different variants of model closure. In a simple closed private one-good economy model, each theory is presented drawing on the relationship between the rate of profit and the rate of growth, as well as on the consideration of one major adjusting variable allowing for the convergence of the endogenous variables of the model to their equilibrium values. This allows for a systematic comparison of exogenous and endogenous variables, of the 'logic' or the chain of causalities in each of the approaches, and of the generation of the long-run equilibrium positions of the system. It is finally shown that the post-Kaleckian model is able to cover many, but not all of the results generated by the old neoclassical growth model, new neoclassical growth theories, classical/Marxian distribution and growth approaches, and post-Keynesian Kaldor-Robinson and Kalecki-Steindl distribution and growth theories. |
| Keywords: | distribution,growth,model comparison,Bhaduri/Marglin model |
| JEL: | E21 E22 E25 O41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:662016&r=gro |
| By: | Detzer, Daniel |
| Abstract: | In the era of financialisation, increasing income inequality could be observed in most developed and many developing countries. Despite these similar developments in inequality, the growth performance and drivers for growth differed markedly among countries, allowing clusters of different growth regimes to be identified. Among them two extreme types: the debt-led private-demand boom type and the export-led mercantilist type. Whereas the former relies mainly on creditfinanced household consumption in order to compensate for the potential lack of demand (associated with the depressing effect of financialisation), the latter relies on net exports as the main driver of aggregate demand. After a short review of the different channels through which financialisation is expected to affect a countries development, a theoretical discussion on the conditions that tend to support the occurrence of either of the two regimes will build the base for the following model exercise. With the help of a stock-flow consistent model it will be demonstrated then how increasing inequality, depending on a countries institutional structure and regulatory framework, affects growth differently, explaining the occurrence of both regime types. Based on the insights of the theoretical discussion and the model results, a foresight exercise will be performed examining how further increase in inequality might affect development of economies around the world but particularly of the Euro area. |
| Keywords: | Euro area,finance-dominate capitalism,financialisation,foresight,household debt,international imbalances,consumption emulation |
| JEL: | E02 E12 E21 E25 E44 E65 F40 F41 F43 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ipewps:642016&r=gro |