nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒06‒04
five papers chosen by
Marc Klemp
Brown University

  1. Nation-Building, Nationalism and Wars By Alberto Alesina; Bryony Reich; Alessandro Riboni
  2. Macroeconomic Uncertainty, Growth and Inflation in the Eurozone: A Causal Approach By Vasilios Plakandaras; Rangan Gupta; Periklis Gogas; Theophilos Papadimitriou
  3. The Growth-Volatility Relationship: What Does Volatility Decomposition Tell? By Mallick, Debdulal
  4. Comparative Advantage in Innovation and Production By Mariano A. Somale
  5. Fear of stagnation? A review on growth imperatives By Richters, Oliver; Siemoneit, Andreas

  1. By: Alberto Alesina; Bryony Reich; Alessandro Riboni
    Abstract: The increase in army size observed in early modern times changed the way states conducted wars. Starting in the late 18th century, states switched from mercenaries to a mass army by conscription. In order for the population to accept to fight and endure war, the government elites began to provide public goods, reduced rent extraction and adopted policies to homogenize the population with nation-building. This paper explores a variety of ways in which nation-building can be implemented and studies its effects as a function of technological innovation in warfare.
    JEL: P16
    Date: 2017–05
  2. By: Vasilios Plakandaras (Department of Economics, Democritus University of Thrace, Komotini, Greece); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Periklis Gogas (Department of Economics, Democritus University of Thrace, Komotini, Greece); Theophilos Papadimitriou (Department of Economics, Democritus University of Thrace, Komotini, Greece)
    Abstract: In this paper, we evaluate the causal relationship between macroeconomic uncertainty indices, inflation and growth rate for 17 Eurozone countries on a county level examination. In performing a series of linear and non-linear causality tests we find little evidence of a causal relationship between uncertainty and macroeconomic variables. Thus, macroeconomic analysis based on uncertainty indices should be treated with caution.
    Keywords: Output growth, inflation, uncertainty, causality
    JEL: C32 E23 E27 E31 E37
    Date: 2017–05
  3. By: Mallick, Debdulal
    Abstract: This paper revisits the empirical relationship between volatility and long-run growth, but the key contribution lies in decomposing growth volatility into its business-cycle and trend components. This volatility decomposition also accounts for enormous heterogeneity among countries in terms of their long-run growth trajectories. We identify a negative effect of trend volatility, which we refer to as long-run volatility, on growth, but no effect of business-cycle volatility. However, if long-run volatility is omitted, there would be a spurious (negative) effect of business-cycle volatility. Our results draw attention to a crucial question about different volatility measures and their implications in macroeconomic analyses.
    Keywords: Growth; Business cycles; Volatility; Volatility persistence; Frequency
    JEL: E32 F44 O11 O40
    Date: 2017–05
  4. By: Mariano A. Somale
    Abstract: This paper develops a multi-country, general equilibrium, semi endogenous growth model of innovation and trade in which specialization in innovation and production are jointly determined. The distinctive element of the model is the ability of the agents to direct their research efforts to specific goods, in a context of heterogeneous innovation capabilities across countries and contemporaneous decreasing returns to R&D. The model features a two-way relationship between trade and technology absent in standard quantitative Ricardian trade models. I calibrate the model using a sample of 29 countries and 18 manufacturing industries and quantify the importance of endogenous adjustments in technology. I find that endogenous adjustments in technology due to directed research can account for up to 52.8% of the observed variance in comparative advantage in production. In addition, the model suggests that standard Ricardian models overestimate the reductions in real income from increases in trade costs and underestimate the increment in real income due to trade liberalizations.
    Keywords: Trade ; Innovation ; Directed research ; Quantitative models
    JEL: F10 F11 O30
    Date: 2017–05
  5. By: Richters, Oliver; Siemoneit, Andreas
    Abstract: Worldwide economic growth is fostered, despite its severe conflicts with sustainability and despite the tendency of secular stagnation. To study whether this fostering is 'only' a question of political and individual will or 'unavoidable' to maintain economic stability, we deliver a rather narrow micro level definition of a 'growth imperative'. We divide the many alleged growth imperatives into five categories and review them, thereby reducing several reasonings to few core arguments. We conclude that neither commercial competition, nor profit expectations, nor the monetary system are stand-alone growth imperatives. Instead, when technological innovations (based on resource consumption) are introduced, market forces lead to a systematic necessity to net invest due to the interplay of creative destruction, profit maximization, and the need to limit losses. Unemployment is substantially caused by productivity gains, and the societal and political necessity of high employment explains why states 'must' foster economic growth. This explanation is culturally and normatively parsimonious and empirically substantiated.
    Keywords: Wachstumszwang,Nullwachstum,säkulare Stagnation,Geldsystem, Wettbewerb,Profit,technischer Fortschritt,growth imperative,zero growth,secular stagnation,monetary system,competition,profit,technological progress
    JEL: Q01 O40 O44 P10 P1
    Date: 2017

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