nep-gro New Economics Papers
on Economic Growth
Issue of 2016‒10‒16
nine papers chosen by
Marc Klemp
Brown University

  1. Witch Trials: Discontent in Early Modern Europe By Chris Hudson
  2. Adherence to Cultural Norms and Economic Incentives: Evidence from Fertility Timing Decisions By Bastien Chabé-Ferret
  3. Economic Conditions and Mortality: Evidence from 200 Years of Data By David M. Cutler; Wei Huang; Adriana Lleras-Muney
  4. Elites and the Expansion of Education in 19th-century Sweden By Andersson, Jens; Berger, Thor
  5. Trust, Economic Growth and Importance of the Institution By Heekyung SON
  6. Is the Environment Compatible with Growth? Adopting an Integrated Framework By Lucas Bretschger
  7. Non-scale endogenous growth with R&D and human capital By Creina Day
  8. The Optimal Use of Exhaustible Resources Under Non-constant Returns to Scale By Sergei Aseev; Konstantin Besov; Serguei Kaniovski
  9. Transitional Dynamics in an R&D-based Growth Model with Natural Resources By Thanh Le; Cuong Le Van

  1. By: Chris Hudson (Graduate Institute of International and Development Studies)
    Abstract: This paper examines the relationship between income and witch trials in early modern Europe. We start by using climate data to proxy for income levels. This builds on previous work by exploiting a far richer panel dataset covering 356 regions and 260 years, including both seasonal temperature and rainfall, as well as over 30,036 witch trials newly documented for this study. We find that a one degree temperature shock leads to a near quadrupling in witch trials in any given year. The second part looks at incomes more directly, and we find that different measures of income have different effects on witch trials. Furthermore, the impact may depend on the structure of the economy and how different stakeholder groups are affected. We also present evidence that the stage in the business cycle is important in predicting witch trials, with the bottom of the business cycle coinciding with a doubling of witch trials in England.
    JEL: I30 J14 J16 N43 N53 O12 Z12
    Date: 2016–10
  2. By: Bastien Chabé-Ferret (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and FNRS)
    Abstract: I analyze the interplay between culture and economic incentives in decision-making. To this end, I study birth timing decisions of second generation migrant women to France and the US. Only the probability to have three or more children increases with the home country fertility norm, whereas the timing of the first two births is either unaffected or negatively correlated. I propose a model that rationalizes these findings in which decisions are the result of a trade-off between an economic cost-benefit analysis and a cultural norm. The model predicts that decisions with a higher cost of deviation from the economic optimum should be less prone to cultural influence. This is consistent with substantial evidence showing that the timing of the first birth bears much larger costs for mothers in terms of labor market outcomes than that of subsequent births.
    Keywords: Cultural Norms, Fertility, Birth Timing
    JEL: J13 J15 Z10 Z12
    Date: 2016–10–03
  3. By: David M. Cutler; Wei Huang; Adriana Lleras-Muney
    Abstract: Using data covering over 100 birth-cohorts in 32 countries, we examine the short- and long-term effects of economic conditions on mortality. We find that small, but not large, booms increase contemporary mortality. Yet booms from birth to age 25, particularly those during adolescence, lower adult mortality. A simple model can rationalize these findings if economic conditions differentially affect the level and trajectory of both good and bad inputs into health. Indeed, air pollution and alcohol consumption increase in booms. In contrast, booms in adolescence raise adult incomes and improve social relations and mental health, suggesting these mechanisms dominate in the long run.
    JEL: H51 I1 I38 J10 N10
    Date: 2016–09
  4. By: Andersson, Jens (Department of Economic History, Lund University); Berger, Thor (Department of Economic History, Lund University)
    Abstract: Did economic and political inequality hamper the spread of mass schooling in the 19th century? This paper analyzes the link between investments in primary schooling and the spread of voting rights in 19th-century Sweden using newly collected data on educational expenditure and the distribution of voting rights in local governments. We find that municipalities governed by local elites spent substantially more on primary schooling relative to those that were more egalitarian. This empirical result is robust to using matching estimators, comparing municipalities located within the same county or district, and using differences in agricultural suitability as an instrument for the presence of local landed elites. Broadly, these findings suggest that elites were historically not always a barrier to the diffusion of elementary education and further our understanding of how Sweden managed to maintain a high level of human capital despite its low level of economic development and restricted franchise in the 19th century.
    Keywords: Democratization; elites; human capital development
    JEL: I21 I24 N33
    Date: 2016–10–07
  5. By: Heekyung SON (Statistical Research Institute in Statistics Korea)
    Abstract: To keep making economic development continuously these days, there is a newly widespread awareness that it is definitely important to accumulate not only the physical and human capital but also the social capital. Many people have been paying attention to the trust which is one of the most representative factors in the social capital from an economic point of view as there are increasing empirical evidences to demonstrate pretty convincingly that the social capital significantly contributes to the economic growth.In order to analyze how the social capital has an impact on the economic growth and what kind of factors make the level of trust changed, I adopted the Corruption Perception Index(CPI) as the indicator representing the "trust" so as to compare its CPI with those of other countries and analyzed data of the CPI from 34 OECD member countries from 2001 to 2013. As for the analysis of the variable factor for the level of trust, I made use of detailed institutional variables such as the political stability, the level of law and order, whether corruption is controlled or not, economic freedom and so on.As a result, the CPI has a positive correlation with the growth rate of the real GDP per capita in the pooled OLS and random effect panel analysis while it has a negative correlation with them in the fixed effect panel analysis, which means there are a variety of regulations to control corruption and the more members of society put even more efforts to abide by social norms, the more negative the growth rate of the real GDP per capita gets as time goes by. I think that's why almost all of advanced countries already built such enough social norms and standards that they do not play any significant role in economy.
    Keywords: Social capital, GDP, Economic growth, Trust, Institution
    JEL: O43 C23
  6. By: Lucas Bretschger (ETH Zurich, Switzerland)
    Abstract: The paper develops an integrated baseline model to assess the trade-offs be- tween the natural environment and economic growth. Consumption growth is considered under welfare and sustainability aspects. The framework features capital accumulation and the sectoral structure of the economy as key elements to cope with resource scarcity and pollution. Model extensions varying the num- ber of sectors and inputs, changing central functional forms, and introducing poor input substitution and population growth are presented. The setup high- lights the dual role of used inputs as a source of environmental problems and a part of the solution; it also discusses uncertainty and momentum effects. The paper concludes that the environment and economic growth can be compatible but that small deviations from the optimal paths my entail unsustainable de- velopment. Critical issues for sustainability are insufficient foresight, increasing damage intensity, and suboptimal policy making while population growth and poor input substitution are not necessarily precarious for future development.
    Keywords: Natural environment, endogenous growth, multisector model, poor substitution, population growth
    JEL: Q43 O47 Q56 O41
    Date: 2016–10
  7. By: Creina Day
    Abstract: This paper examines the conditions under which increasing knowledge, encapsulated in ideas for new technology through R&D and embodied in human capital through education, sustains economic growth. We develop a general model where, consistent with recent literature, growth is non-scale (not increasing in population size) and endogenous (generated by factors within R&D and education). Recent models feature the counterfactual assumption of constant returns to existing knowledge and restrict the substitutability of inputs within R&D and education. We find that non-scale endogenous growth is possible under less stringent conditions. Our findings reconcile sustained economic growth with evidence of diminishing marginal returns in education and R&D, which suggests an ambiguous role for R&D policy.
    Date: 2016–10
  8. By: Sergei Aseev; Konstantin Besov; Serguei Kaniovski (WIFO)
    Abstract: The paper offers a complete analysis of the welfare-maximising capital investment and resource depletion policies in the Dasgupta-Heal-Solow-Stiglitz (DHSS) model with capital depreciation and any returns to scale. We establish a general existence result and show that an optimal admissible policy may not exist if the output elasticity of the resource equals 1. We characterise the optimal policies by applying an appropriate version of the Pontryagin maximum principle for infinite-horizon optimal control problems. We conclude the paper with an economic interpretation and a discussion of the welfare-maximising policies.
    Keywords: optimal growth, non-constant returns to scale, exhaustible resources
    Date: 2016–10–04
  9. By: Thanh Le (The University of Queensland [Brisbane]); Cuong Le Van (VCREME - VanXuan Center of Research in Economics, Management and Environment - VanXuan Center of Research in Economics, Management and Environment, CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IPAG Business School)
    Abstract: Upon introducing natural resources, both renewable and non-renewable, into an endogenous growth framework with R&D, this paper derives the transitional dynamics of an economy towards its long-run equilibrium. Using the Euler - Lagrange framework, this paper has succesfully figured out the optimal paths of the economy. It then shows the existence and uniqueness of a balanced growth path for each type of resources. The steady state is shown to be of a saddle point stability. Along the balanced growth path, it is found that a finite size resource sector coexists with other continuously growing sectors. The paper then examines long-run responses of the economy to various changes pertaining to innovative production condition, resource sector parameters as well as rate of time preference. It also shows that positive long-run growth will be sustained regardless the type of resources used.
    Keywords: transitional dynamics,natural resources,vertical innovation,R&D-based growth
    Date: 2014–10

This nep-gro issue is ©2016 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.