nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒06‒09
eleven papers chosen by
Marc Klemp
Brown University

  1. Back to the Future: International Trade Costs and the Two Globalizations By Michel Fouquin; Jules Hugot
  2. The Deep Historical Roots of Macroeconomic Volatility By Sam Hak Kan Tang; Charles Ka Yui Leung
  3. Inequality from Generation to Generation: The United States in Comparison By Corak, Miles
  4. Business Cycles, Growth and Economic Policy: Schumpeter and the Great Depression By Muriel Dal-Pont Legrand; Harald Hagemann
  5. Researchers and the Wealth of Nations By Cabello, Matias; Rojas, Carolina
  6. The Impact of Slave Trade on Current Civil Conflict in Sub-Saharan Africa By Zhang, Yu; Kibriya, Shahriar
  7. Calamity, Conflict and Cash Transfers: How Violence Affects Access to Aid in Pakistan By Yashodhan Ghorpade
  8. Creating an environment for economic growth: creativity, entrepreneurship or human capital? By Faggian, Alessandra; Partridge, Mark; Malecki, Ed
  9. The Triangular Causality among Education, Health and Economic Growth: A Time Series Analysis of Nepal By Gangadhar Dahal
  10. The impact of gender equality policies on economic growth By Jinyoung Kim; Jong-Wha Lee; Kwanho Shin
  11. Regime-Switching Sunspot Equilibria in a One-Sector Growth Model with Aggregate Decreasing Returns and Small Externalities By Takashi Kamihigashi

  1. By: Michel Fouquin; Jules Hugot
    Abstract: This article provides an assessment of the nineteenth century trade globalization based on a systematic collection of bilateral trade statistics. Drawing on a new data set of more than 1.9 million bilateral trade observations for the 1827-2014 period, we show that international trade costs fell more rapidly than intra-national trade costs from the 1840s until the eve of World War I. This finding questions the role played by late nineteenth century improvements in transportation and liberal trade policies in sparking this First Globalization. We use a theory-grounded measure to assess bilateral relative trade costs. Those trade costs are then aggregated to obtain world indices as well as indices along various trade routes, which show that the fall of trade costs began in Europe before extending to the rest of the world. We further explore the geographical heterogeneity of trade cost dynamics by estimating a border effect and a distance effect. We find a dramatic rise in the distance effect for both the nineteenth century and the post-World War II era. This result shows that both modern waves of globalization have been primarily fueled by a regionalization of world trade.
    Keywords: Globalization;Trade Costs;Border Effect;Distance Effect
    JEL: F14 F15 N70
    Date: 2016–05
  2. By: Sam Hak Kan Tang; Charles Ka Yui Leung
    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
  3. By: Corak, Miles (University of Ottawa)
    Abstract: To understand the degree of intergenerational mobility in the United States, and the differences between Americans and others, it is important to appreciate the workings and interaction of three fundamental institutions: the family, the market, and the state. But comparisons can also be misleading. The way in which families, labor markets, and government policy determine the life chances of children is complicated; the result of a particular history, societal values, and the nature of the political process. It might be one thing to say that the United States has significantly less intergenerational mobility than Denmark or Norway, but it is entirely another thing to suggest that these countries offer templates for the conduct of public policy that can be applied on this side of the Atlantic. There is no way to get from here to there. It is helpful to focus on a particularly apt comparison, that between the United States and Canada, in order to illustrate how the configuration of the forces determining the transmission of inequality across generations differs in spite of the fact that both of these countries share many other things in common, particularly the importance and meaning of equality of opportunity and the role of individual hard work and motivation.
    Keywords: equality of opportunity, intergenerational mobility
    JEL: J62 J68
    Date: 2016–05
  4. By: Muriel Dal-Pont Legrand (GREDEG CNRS; Université Nice Sophia Antipolis); Harald Hagemann (University of Hohenheim, Stuttgart)
    Abstract: Joseph A. Schumpeter’s theory of economic development analyzes how growth and cycle dynamics intertwine. The process of Creative Destruction plays an essential role in that dynamics: embodying a cleaning effect, it has a clear beneficial impact on long-run development. For that reason, and also for some of his famous (and provocative) non-interventionists statements, Schumpeter is generally interpreted as a pure liquidationist. This paper contests this rather simplistic view and shows that Schumpeter not only expressed much more nuanced positions as far as practical economic issues were concerned but also that his views on economic policy were rooted in his earlier contributions before the Great Depression, attesting to a stronger time-consistency of his contributions.
    Keywords: Business cycles, growth, short run, long run, creative destruction, cleansing effect, productive recessions, economic policy, Schumpeter
    JEL: B22 B31
    Date: 2016–05
  5. By: Cabello, Matias; Rojas, Carolina
    Abstract: Despite the repeated claim by eminent students of economic growth that scientists and inventors have contributed to economic development, no study has yet quantified this effect using the rich historical record of great minds. Introducing a novel database of per capita researchers since the antiquity, we show that the history of research activity (corrected for geographical biases) predicts economic growth over the long run better than any other established growth predictor, and that this predictive power, while subject to swings, has been consistently increasing through time over the long run. These conclusions are drawn after presenting a number of facts suggesting that forces exogenous to income and population growth have determined how intensively countries have engaged in research. In contrast to a large body of literature, we find that property rights and schooling have been of minor importance for research and for economic growth through modern history.Our estimated dynamic impact of researcher densities on economic growth are very consistent through a variety of samples and regressions, based either on cross-sectional or on time-series variance. Permanently doubling the number of researchers per capita had barely an impact in 1800, but today its impact might be an increase of annualized economic growth rates of 1% in a 20-years span.
    Keywords: Economic growth, long run, science, research, education, institutions.
    JEL: N1 N10 O11 O30 O43 O47
    Date: 2016–05–19
  6. By: Zhang, Yu; Kibriya, Shahriar
    Abstract: Slave trade affects regional economic development, degree of trust among individuals, community cohesion, and ethnic identity, which in turn have a bearing on the spatial distribution of civil conflict in Africa. Hence, ethnic homelands that have more slaves exported are expected to be more prone to conflict. By using a subnational dataset in Sub Sahara Africa (SSA) between 1997 and 2014, we find that slave trade in the colonial period significantly causes higher risks of civil conflict in the present. In order to reduce the concern of endogeneity, we employ the historical slave trade distances as instruments, which do not affect conflict except through their influence on slave trade.
    Keywords: civil conflict, slave trade, sub Saharan Africa, Institutional and Behavioral Economics, International Development,
    Date: 2016–08–02
  7. By: Yashodhan Ghorpade (Institute of Development Studies, University of Sussex, Falmer, Brighton BN1 9RE, UK.)
    Abstract: State presence and longevity have long been associated with growth and development, and yet analyzing their relationship remains challenging as both the length of state rule and geographical boundaries change over time. After addressing conceptual and practical concerns on its construction, we present a measure of the mean duration of state rule that is aimed at resolving some of these issues. We then present our findings on the relationship between our measure and local development, drawing from observations in Europe spanning from 0 AD to 2000 AD. We find that during this period, the mean duration of state rule and the local income level have a nonlinear, inverse U-shaped relationship, controlling for a set of historical, geographic and socioeconomic factors. Regions that have historically experienced short or long duration of state rule on average lag behind in their local wealth today, while those that have experienced medium-duration state rule on average fare better.
    Date: 2016–05
  8. By: Faggian, Alessandra; Partridge, Mark; Malecki, Ed
    Abstract: Researchers have long searched for the underlying causes of growth. In developed countries, as they shifted from industrial to knowledge economies, researchers have recently stressed the following sources of growth embodied in its workforce: human capital (linked to education), entrepreneurship (variously measured), and the creative class (associated with worker occupations). This study first proposes new conceptual ways to portray the interrelationship of these knowledge-based attributes. Then simultaneously considers all of these factors in an empirical model using U.S. counties. We find that human capital as measured by educational attainment and the intensity of small and medium-sized firms are statistically associated with subsequent growth, while other factors such as the share of creative class workers or the share of advanced technology industries are insignificant. We conclude that economic development strategies are too focused on attracting large outside firms and attracting advanced technology firms and not enough attention is given to building a foundation of competitive small and medium-sized firms.
    Keywords: Economic growth, human capital, entrepreneurship, creative class, US counties
    JEL: J24 O1 R11
    Date: 2016–05–17
  9. By: Gangadhar Dahal (University of Warsaw)
    Abstract: he study scrutinizes the existence of the long run association and triangular causality among real GDP per capita, per capita education expenditures and per capita health expenditures in Nepal. The present study applies ARDL bounds testing approach to examine the existence of long-run relationship and Granger Causality test for estimating short run, long run and combined short run and long run triangular causality among the variables for the time series data of Nepal from 1995-2014. The present study exposes that there exists long run relationship among real GDP per capita, per capita education expenditures and per capita health expenditures in Nepal. There exist two-way relationships between per capita real GDP and per capita education expenditures in the short run, whereas per capita health expenditures and real GDP per capita do not granger cause each other in short run in Nepal. Also, there is two-way granger causality among real GDP per capita, per capita education expenditures and per capita health expenditures in a long run in Nepal. The present study also confirms the existence of joint causality among real GDP per capita, per capita education expenditures and per capita health expenditures in both short runs and long run in Nepal.
    Keywords: Real GDP per capita; Per capita education expenditures; Per capita Health Expenditures of Nepal
    JEL: O10 I21 I15
  10. By: Jinyoung Kim; Jong-Wha Lee; Kwanho Shin
    Abstract: This paper introduces a model of gender inequality and economic growth that focuses on the determination of women's time allocation among market production, home production, child rearing, and child education. The theoretical model is based on Agenor (2016), but differs in several important dimensions. The model is calibrated using microlevel data of Asian economies, and numerous policy experiments are conducted to investigate how various aspects of gender inequality are related to the growth performance of the economy. The analysis shows that improving gender equality can contribute significantly to economic growth by changing females' time allocation and promoting accumulation of human capital. We find that if gender inequality is completely removed, aggregate income will be about 6.6% and 14.5% higher than the benchmark economy after one and two generations respectively, while corresponding per capita income will be higher by 30.6% and 71.1% in the hypothetical gender-equality economy. This is because fertility and population decrease as women participate more in the labor market.
    Keywords: gender inequality, economic growth, overlapping generations model, labor market, human capital accumulation
    JEL: E24 E60 J13 J71
    Date: 2016–05
  11. By: Takashi Kamihigashi (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: This paper shows that regime-switching sunspot equilibria easily arise in a one-sector growth model with aggregate decreasing returns and arbitrarily small externalities. We construct a regime-switching sunspot equilibrium under the assumption that the utility function of consumption is linear. We also construct a stochastic optimal growth model whose optimal process turns out to be a regime-switching sunspot equilibrium of the original economy under the assumption that there is no capital externality. We illustrate our results with numerical examples.
    Date: 2016–05

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