nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒09‒11
fourteen papers chosen by
Marc Klemp
Brown University

  1. Land Inequality, Education, and Marriage: Empirical Evidence from Nineteenth-Century Prussia By Cinnirella, Francesco; Hornung, Erik
  2. Understanding per-capita income growth in preindustrial Europe By Nils-Petter Lagerlof
  3. Persistence of innovation and patterns of firm growth By Dario Guarascio; Federico Tamagni
  4. Patents vs R&D Subsidies on Income Inequality By Chu, Angus C.; Cozzi, Guido
  5. Sustainable growth By Asheim, Geir B.
  6. Aid-Macroeconomic Policy Environment- Growth Nexus: Evidence from Selected Asian Countries By Saima Liaqat; Temesgen Kifle; Mohammad Alauddin
  7. Environmental Policy and Growthwhen Environmental Awarenessis Endogenous By Karine Constant; Marion Davin
  8. Growth in International Commodity Prices, the Terms of Trade, and GDP per capita: A Case Study of Vietnam By Markus Brueckner; Kien Trung Nguyen
  9. Stabilization Effects of Taxation Rules in Small-Open Economies with Endogenous Growth By Been-Lon Chen; Yunfang Hu; Kazuo Mino
  10. Sovereign Debt Restructuring and Growth By Lorenzo Forni; Geremia Palomba; Joana Pereira; Christine J. Richmond
  11. Explaining Income Inequality and Intergenerational Mobility: The Role of Fertility and Family Transfers By Julian Kozlowski; Diego Daruich
  12. The Design of Fiscal Reform Packages; Insights from a Theoretical Endogenous Growth Model By Andrew Hodge
  13. Inequality, Gender Gaps and Economic Growth; Comparative Evidence for Sub-Saharan Africa By Dalia S Hakura; Mumtaz Hussain; Monique Newiak; Vimal Thakoor; Fan Yang
  14. Natural resources and capital structure By Kurronen, Sanna

  1. By: Cinnirella, Francesco; Hornung, Erik
    Abstract: In this study we review the literature on the relationship between landownership inequality and the accumulation of human capital in historical perspective. Furthermore we provide new evidence on the relationship between landownership inequality and marriage patterns at the county level in nineteenth-century Prussia. Formally the landed elite could have influenced not only the labor relations with the peasants but also their marriage decisions. Using cross-sectional as well as panel analysis we find no evidence that noble landowners directly affected marriage rates. Instead we find a robust negative association between average formal education and the share of married women. This finding is in line with recent theoretical and empirical literature on the role of gender specific human capital in the demographic transition.
    Keywords: education; Land Inequality; Marriage; Prussian Economic History
    JEL: I25 J12 N33 O43 Q15
    Date: 2016–09
  2. By: Nils-Petter Lagerlof (York University)
    Abstract: Fouquet and Broadberry (Journal of Economic Perspectives 2015) have recently compiled detailed time-series data over per-capita incomes for several European countries from as early as 1300 up to 1800. The time series are all volatile and highly persistent; per-capita incomes move in decades-long cycles of expansions and contractions. The current paper examines a Malthusian model with realistic life-cycle structure, and stochastic and increasing rates of growth in agricultural productivity. This model can generate per-capita income dynamics that are qualitatively and quantitatively similar to the Fouquet-Broadberry data.
    Date: 2016
  3. By: Dario Guarascio; Federico Tamagni
    Abstract: In this work we test if persistent innovators, defined according to different innovation activities (R&D, product and process innovation, patenting) grow more than other firms, and if innovation persistence can contribute to explain the so far little evidence in favor of persistence in growth itself. We exploit a somewhat uniquely long-in-time dataset tracing a representative sample of Spanish manufacturing firms over the period 1990-2012. This allows to overcome the difficulties in the definition of persistent innovators traditionally based on innovation surveys. Our findings, against the expectations, support that persistent innovators do not generally outperform the other firms. First, they do not grow more, and actually we find that, despite some variation across innovation persistence indicators, they even grow less than other firms in the top-quantiles of the growth rates distribution, that is among high-growth firms. Further, persistent innovators do not show higher growth persistence than other firms, in none of the quantiles of the growth rates distribution, independently from the innovation persistence indicator considered.
    Keywords: firm growth, innovation persistence, product and process innovation, R\&D, patents, quantile regressions
    Date: 2016–02–09
  4. By: Chu, Angus C.; Cozzi, Guido
    Abstract: This study explores the effects of patent protection and R&D subsidies on economic growth and income inequality using a Schumpeterian growth model with heterogeneity in household asset holdings. We find that although strengthening patent protection and raising R&D subsidies have the same macroeconomic effect of stimulating economic growth, they have drastically different microeconomic implications on income inequality. Specifically, strengthening patent protection increases income inequality whereas raising R&D subsidies decreases (increases) it if the quality step size is sufficiently small (large). An empirically realistic quality step size is smaller than the threshold implying a negative effect of R&D subsidies on income inequality. We also calibrate the model to provide a quantitative analysis and find that strengthening patent protection causes a moderate increase in income inequality and a negligible increase in consumption inequality whereas raising R&D subsidies causes a significant decrease in both income inequality and consumption inequality.
    Keywords: R&D subsidies, patents, income inequality, economic growth
    JEL: D3 O3 O4
    Date: 2016–09
  5. By: Asheim, Geir B. (Dept. of Economics, University of Oslo)
    Abstract: This paper explores the view that a criterion of intergenerational equity serves to make choices according to ethical intuitions on a domain of relevant technological environments. In line with this view I first calibrate different criteria of intergenerational equity in the AK model of economic growth, with a given Productivity parameter A, and then evaluate their performance by mapping the consequences of the criteria in various technological environments. The evaluation is based on the extent to which they yield social choice mappings satisfying four desirable properties. The Calvo criterion as well as sustainable discounted utilitarianism and rank-discounted utilitarianism yield sustainable growth in the AK model, the Ramsey technology and the Dasgupta-Heal-Solow-Stiglitz technology for any specifications of these technological environments.
    Keywords: Intergenerational; Equity;
    JEL: D63 D71 O41 Q01
    Date: 2016–04–28
  6. By: Saima Liaqat (Visiting PhD Scholar at University of Queensland, Australia /PhD scholar at University of the Punjab Lahore, Pakistan); Temesgen Kifle (School of Economics, The University of Queensland, St Lucia, Brisbane, Australia); Mohammad Alauddin (School of Economics, The University of Queensland, St Lucia, Brisbane, Australia)
    Abstract: This study empirically investigates aid effectiveness debate in light of Burnside and Dollar (2000) hypothesis that policy environment the recipient country is critically important for aid effectiveness.The data on ten developing countries of South and Southeast Asian region over a period of 1984-2015 form the empirical basis of this investigation. In line with Burnside and Dollar (2000) a policy index is constructed which includes inflation, budget deficit/surplus and openness. Two stage least squares (2SLS) and Generalised Method of Moments (GMM) techniques were employed to test the model. Two major findings resulted from this study. First, aid had a negative impact on economic growth during the study period for the Asian region. Second, there was no evidence to suggest that aid policy interaction had any impact on economic growth implying that the good policy environment is not a condition for economic growth in context of aid effectiveness. This in effect refutes the Burnside - Dollar aid effectiveness hypothesis.
    Keywords: foreign aid, macroeconomic policy, economic growth, Asia
    JEL: F35 O19 O38 P45 O11 O53
    Date: 2016–08–29
  7. By: Karine Constant; Marion Davin
    Abstract: This paper examines the relationship between environmental policy and growth whengreen preferences are endogenously determined by education and pollution. We consideran environmental policy in which the government implements a tax on pollution andrecycles the revenue to fund pollution abatement activities and/or an education subsidy(influencing green behaviors). When the sensitivity of agents’ environmental preferencesto pollution and human capital is high, the economy can converge to a balanced growthpath equilibrium with damped oscillations. We show that this environmental policy canboth remove the oscillations, associated with intergenerational inequalities, and enhancethe long-term growth rate. However, this solution requires that the revenue from the taxrate must be allocated to education and direct environmental protection simultaneously.We demonstrate that this type of mixed-instrument environment policy is an effectiveway to address environmental and economic issues in both the short and the long run
    Date: 2016–08
  8. By: Markus Brueckner; Kien Trung Nguyen
    Abstract: The Vietnamese economy is characterized by a high degree of international trade openness and a relatively low GDP share of net-exports. This paper examines the effect of growth in the terms of trade, and more specifically, in international commodity prices, on Vietnam's GDP per capita growth. The paper finds that, during 2000-2014, growth in the terms of trade contributed positively to Vietnam’s GDP per capita growth but the effect is not large: less than one-tenth of Vietnam’s GDP per capita growth was due to growth in its terms of trade. The paper argues that the relatively small effect of growth in the terms of trade on GDP per capita growth is due to a low GDP share of net-exports. Econometric model estimates show that transitional convergence accounted for about half of Vietnam's GDP per capita growth during 2000-2014.
    Date: 2016–08
  9. By: Been-Lon Chen (Institute of Economics, Academia Sinica); Yunfang Hu (Graduate School of Economics, Kobe University); Kazuo Mino (Faculty of Economics, Doshisha University)
    Abstract: This paper studies stabilization effects of nonlinear income taxation in small open economies with endogenous growth. We show that in the standard setting where domes- tic households freely lend to or borrow from foreign households under an exogenously given world interest rate, progressive taxation gives rise to equilibrium indeterminacy, while regressive taxation establishes equilibrium determinacy. These policy effects do not necessarily hold, either if the time discount rate is endogenously determined or if the world interest rate is elastic.
    Keywords: Taxation Rules, Equilibrium Indeterminacy, Small-Open Economies, En-dogenous Growth
    JEL: E62 O41
    Date: 2016–07
  10. By: Lorenzo Forni; Geremia Palomba; Joana Pereira; Christine J. Richmond
    Abstract: This paper studies the effect of sovereign debt restructurings with external private creditors on growth during the period 1970-2010. We find that there are bad and good (or not so bad) debt restructurings for growth. While growth generally declines in the aftermath of a sovereign debt restructuring, agreements that allow countries to exit a default spell (final restructurings) are associated with improving growth. The impact can be significant. In general, three years after restructuring, growth is about 5 percent lower compared to countries that did not face restructuring over the same period. The exception is for final restructurings, which result in positive growth in the years immediately after the restructuring. Final restructurings tend to be better for growth because they reduce countries’ debt, with the strongest effect for countries that exit restructurings with relatively low debt levels.
    Keywords: Sovereign debt defaults;Debt restructuring;Economic growth;Econometric models;Time series;sovereign default, debt restructuring, growth, haircut, crisis resolution
    Date: 2016–07–22
  11. By: Julian Kozlowski (New York University); Diego Daruich (New York University)
    Abstract: How much of income inequality is due to initial opportunities relative to adult income risk? What factors determine intergenerational mobility? We study these questions with a particular interest in the impact of family choices: fertility and transfers. Fertility rates, which are higher for low-income than high-income families, are associated with differences in the level of resources available for children's education. To evaluate the quantitative importance of fertility and family transfers we extend the standard heterogeneous agent life-cycle model with idiosyncratic income shocks and incomplete markets to allow for endogenous fertility, family transfers and education. Initial conditions are defined as the agents' initial state variables, which are endogenously related to parental background. We find that initial conditions account for 50\% of the variation in lifetime-earnings. Moreover, fertility and parents-to-children transfers generate 20 and 39\% of the intergenerational mobility respectively.
    Date: 2016
  12. By: Andrew Hodge
    Abstract: This paper studies the impact on growth, welfare, and government debt of fiscal reform packages in a theoretical model drawing together three key features of the endogenous growth literature: (i) investment in technology (in the form of human capital) offsets diminishing marginal productivity of private capital, allowing for perpetual growth in output per capita; (ii) changes in investment behavior because of cuts to distortionary tax rates impact long-run growth; and (iii) public capital has a role influencing total factor productivity and growth. A quantitative simulation using reasonable parameter values suggests that modest capital and/or labor income tax cuts and public investment increases have significant positive effects on consumer welfare but small effects on per capita income growth, where fiscal costs are offset by reductions in unproductive government spending. Capital income tax cuts and public investment increases continue to boost welfare when offset by consumption tax rises (rather than spending cuts), although the welfare benefits of modest labor income tax cuts are outweighed by the costs of a compensating consumption tax increase.
    Keywords: Fiscal reforms;Fiscal policy;Public investment;Economic growth;Econometric models;Economic theory;Fiscal policy; Endogenous growth
    Date: 2016–07–22
  13. By: Dalia S Hakura; Mumtaz Hussain; Monique Newiak; Vimal Thakoor; Fan Yang
    Abstract: A growing body of empirical evidence suggests that inequality—income or gender related—can impede economic growth. Using dynamic panel regressions and new time series data, this paper finds that both income and gender inequalities, including from legal gender-based restrictions, are jointly negatively associated with per capita GDP growth. Examining the relationship for countries at different stages of development, we find that this effect prevails mainly in lower income countries. In particular, per capita income growth in sub-Saharan Africa could be higher by as much as 0.9 percentage points on average if inequality was reduced to the levels observed in the fastgrowing emerging Asian countries. High levels of income inequality in sub-Saharan Africa appear partly driven by structural features. However, the paper’s findings show that policies that influence the opportunities of low-income households and women to participate in economic activities also matter and, therefore, if well-designed and targeted, could play a role in alleviating inequalities.
    Keywords: Poverty and inequality;Sub-Saharan Africa;Women's economic conditions;Income inequality;Gender;Low-income developing countries;Economic growth;Panel analysis;Regression analysis;Time series;Income inequality, gender inequality, economic growth, and sub-Saharan Africa
    Date: 2016–06–08
  14. By: Kurronen, Sanna
    Abstract: ​This paper examines the effect of natural resources on capital structure of the firm. Using an extensive dataset of listed firms in 70 countries, we show that firms operating in resource extraction industries have less debt and that that debt tends to have a longer maturity than that of other non-financial firms. Moreover, non-resource firms in resource-dependent countries are found to be less indebted than their counterparts in other countries. The results suggest that the very fact of a firm’s location in a resource-dependent country may be an overlooked country-specific de-terminant of firm capital structure and that financial institutions in resource-dependent countries may play a role in exacerbating a nation’s resource curse.
    Keywords: resource dependence, capital structure, panel data
    JEL: G32 O13 Q32
    Date: 2016–08–29

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