nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒06‒18
eight papers chosen by
Marc Klemp
Brown University

  1. Kinship Systems, Cooperation and the Evolution of Culture By Benjamin Enke
  2. Inclusive Growth Framework By Alexei P Kireyev; Jingyang Chen
  3. A Two-Sector Model of Creative Capital Driven Regional Economic Growth By Batabyal, Amitrajeet; Nijkamp, Peter
  4. Artists, Engineers, and Aspects of Economic Growth in a Creative Region By Batabyal, Amitrajeet; Beladi, Hamid
  5. The Matching Degree between Financial Structure and Technical Level and Economic Development By Ye, Dezhu; Deng, Jie; Zeng, Fanqing
  6. Global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture By Bruno Lanz; Simon Dietz; Tim Swanson
  7. Do Remittances Promote Labor Productivity Growth in Mexico? An Empirical Analysis, 1970-2014. By Miguel D. Ramirez
  8. Anatomizing the Mechanics of Structural Change By Jaime Alonso-Carrera; María Jesús Freire-Serén; Xavier Raurich

  1. By: Benjamin Enke
    Abstract: Cultural psychologists and anthropologists argue that societies have developed heterogeneous systems of social organization to cope with social dilemmas, and that an entire bundle of cultural characteristics has coevolved to enforce cooperation within these different systems. This paper develops a measure of the historical tightness of kinship structures to provide empirical evidence for this large body of theories. In the data, societies with loose ancestral kinship ties cooperate and trust broadly, which is apparently sustained through a belief in moralizing gods, universally applicable moral principles, feelings of guilt, and large-scale institutions. Societies with a historically tightly knit kinship structure, on the other hand, exhibit strong in-group favoritism: they cheat on and are distrusting of out-group members, but readily support in-group members in need. This cooperation scheme is enforced by moral values of in-group loyalty, conformity to tight social norms, emotions of shame, and strong local institutions. These relationships hold across historical ethnicities, contemporary countries, ethnicities within countries, and migrants. The results suggest that religious beliefs, language, emotions, morality, and social norms all coevolved to support specific social cooperation systems.
    JEL: D0 O0
    Date: 2017–06
  2. By: Alexei P Kireyev; Jingyang Chen
    Abstract: The paper suggests an operationally usable framework for the evaluation of growth inclusiveness—the inclusive growth framework (IGF). Based on the data on growth, poverty, and inequality, the framework allows for the quantitative assessment of growth inclusiveness. The assessment relies on the decomposition of the change in poverty into growth, distribution, and decile effects, which can be calculated using the Distributive Analysis Stata Package (DASP). Availability of at least two household surveys is the main precondition for the use of the IGF. The application of the IGF is illustrated with two country cases of Senegal and Djibouti.
    Date: 2017–05–30
  3. By: Batabyal, Amitrajeet; Nijkamp, Peter
    Abstract: We study aspects of economic growth in a region that is creative in the sense of Richard Florida. We model creativity by supposing that the region under study has two sectors. The first sector uses physical capital {K(t)} and trained workers {A(t)W(t)} to produce creative capital {R(t)}. The second sector uses physical and creative capital to produce a final consumption good {Q(t)}. In this setting, we accomplish four tasks. First, we derive the equations of motion for physical capital per trained worker (k) and creative capital per trained worker (r). Second, we find combinations of k and r for which k ̇=r ̇=0. Third, we investigate whether the economy of our creative region has a balanced growth path (BGP). Finally, assuming that our region is initially on a BGP, we study the impact of a permanent increase in the savings rate (s) on the trajectory of output per worker.
    Keywords: Balanced Growth Path, Consumption Good, Creative Capital, Creative Region, Economic Growth
    JEL: O41 R11
    Date: 2017–05–25
  4. By: Batabyal, Amitrajeet; Beladi, Hamid
    Abstract: We study aspects of economic growth in a region that is creative in the sense of Richard Florida. Members of the creative class fall into one of two possible groups. This grouping stems from the manner in which creative capital is acquired by the individual members. In this setting, we accomplish five tasks. First, we derive the wage of members in each of the two creative class groups. Second, we show that the average wage increases with the physical capital per creative class member ratio. Third, we derive an expression for the steady state physical capital per creative class member ratio. Fourth, we show that in a particular circumstance, the distribution of income does not affect the steady state physical capital per creative class member ratio. Finally, we ascertain the optimal income redistribution rule that maximizes the average steady state income of the creative class in the region under study.
    Keywords: Creative Capital, Creative Class, Economic Growth, Income Redistribution, Region
    JEL: D90 R11
    Date: 2017–06–07
  5. By: Ye, Dezhu (Jinan University); Deng, Jie (Jinan University); Zeng, Fanqing (Jinan University)
    Abstract: New Structural Economics suggests that there is no universally optimal financial structure for all countries,only when the financial structure match well with the technical level, it can effectively promote economic growth. Following corporate finance literatures, we try to discuss the measurement of regression residual on the abnormal level of the explained variables, regard the residual after the regression of each country’s financial structure on technical level as the main substitute variable, and then test the issue. The empirical results show that the matching degree between financial structure and technical level is significantly positively correlated to economic development, and the effect tends to be more obvious in developing countries. This paper also uses the alternative measure financial structure, the sociology’s hierarchical matching method to measure the matching degree between financial structure and technical level,and the instrumental variables method to deal with the possible endogenous problems, all empirical results supportthe same conclusions. To make a comparison, we add the gap variables of the optimal financial structure which regards OECD countries as the optimal criterion into our regression equation, the results indicate that our coordination variables are more significant and have stronger explanatory power on economic growth.Further research finds that promoting the growth of TFP is the mechanism through which the matching relationship affects economic development.
    Keywords: New Structural Economics, the Optimal Financial Structure, the Matching Degree of Financial Structure—Technical Level, Economic Development
    JEL: E44 G00 O16
    Date: 2017–06–13
  6. By: Bruno Lanz; Simon Dietz; Tim Swanson
    Abstract: We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960-2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.
    Keywords: Agricultural productivity; Economic growth; Endogenous innovations; Environmental constraints; Food security; Global population; Land conversion; Stochastic control
    JEL: O11 O13 O31 J11 C61 Q16 Q24
    Date: 2017–05
  7. By: Miguel D. Ramirez (Department of Economics, Trinity College)
    Abstract: This paper investigates remittance flows to Mexico during the 1980-2014 period in absolute terms, relative to GDP, in comparison to FDI inflows, and in terms of their regional destination. Next, the paper reviews the growing literature that assesses the impact of remittances on investment spending and economic growth. Third, it presents a simple endogenous growth model that explicitly incorporates the potential impact of remittance flows on economic and labor productivity growth. Fourth, it presents a modified empirical counterpart to the simple model that tests for both single- and two-break unit root tests, as well as performs cointegration tests with an endogenously determined level shift over the 1970-2014 period. The error-correction model estimates suggest that remittance flows to Mexico have a positive and significant effect, albeit small, on both economic growth and labor productivity growth. The concluding section summarizes the major results and discusses potential avenues for future research on this important topic
    Keywords: Error-correction model, FDI inflows, Gregory-Hansen cointegration single-break test, Gross fixed capital formation, Johansen Cointegration test, KPSS no unit root test, Lee-Strazicich two-break unit root test, remittance flows, and Zivot-Andrews single-break unit root
    JEL: C10 F01
    Date: 2017–06
  8. By: Jaime Alonso-Carrera (Universidade de Vigo); María Jesús Freire-Serén (Universidade de Vigo); Xavier Raurich (Universitat de Barcelona)
    Abstract: We characterize several possible mechanisms of structural change by using a general multisector growth model, where preferences and technologies are not parameterized. In this generic set up, we derive the growth rates of sectoral employment shares at the equilibrium. We find that the economic fundamentals governing structural change in the sectoral employment shares are: (i) the income elasticities of the demand for consumption goods; (ii) the Allen-Uzawa elasticities of substitution between consumption goods; (iii) the capital income shares in sectoral outputs; and (iv) the elasticity of substitution between capital and labor in each sector. These fundamentals determine the effect that the growth rates of aggregate income, relative prices, rental rates and technological progress have on structural change. Finally, we estimate the aforementioned fundamentals to develop an accounting exercise that quantifies the contribution of each mechanism to the U.S. structural change.
    Keywords: Structural change, structural transformation, non-homothetic preferences, sectoral productivity
    JEL: O11 O41 O47
    Date: 2017

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