nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒09‒24
seven papers chosen by
Marc Klemp
Brown University

  1. The Role of Novelty-Seeking Traits in Contemporary Knowledge Creation By Erkan Goeren
  2. Aggregating the Fertility Transition: Intergenerational Dynamics in Quality and Quantity By Tom Vogl
  3. Biodiversity, infectious diseases and the dilution effect By Stefano BOSI; David DESMARCHELIER; Manh Hung NGUYEN
  4. Steam democracy up! Industrialization-led opposition in Napoleonic plebiscites By Jean Lacroix
  5. Optimal Population Growth as an Endogenous Discounting Problem: The Ramsey Case By Raouf Boucekkine; Blanca Martínez; José Ramón Ruiz-Tamarit
  6. Firms’ Retention Behavior, Debt, and Macroeconomic Dynamics By Yun K. Kim; Alan G. Isaac
  7. The impact of renewable versus non-renewable natural capital on economic growth By Laura Recuero Virto; Denis Couvet

  1. By: Erkan Goeren (University of Oldenburg, Department of Economics)
    Abstract: This paper hypothesizes and empirically establishes the persistent effects of novelty-seeking traits on crosscountry differences in scientifc knowledge creation. I use data on the prevalence of specifc allele variants of the human DRD4 exon III gene, which population geneticists have linked to the human phenotype of novelty-seeking behavior to examine its relationship to scientifc knowledge creation in society. The results suggest a positive and statistically signifcant linear relationship between both outcomes that is consistent with the hypothesis that the prevalence of novelty-seeking traits in society facilitates scientifc knowledge creation through benefcial human behaviors related to risk-taking and explorative behavior. The empirical fndings remain qualitatively unaffected when controlling for additional historical, biogeographical, and socioeconomic factors that appear as additional important determinants in the creation of scientifc knowledge in society.
    Keywords: DRD4 Exon III, Novelty-Seeking Traits, Entrepreneurial Activity, Knowledge Creation, Technological Progress, Economic Development, Natural Selection, Genetic Diversity
    Date: 2017–09
  2. By: Tom Vogl (Princeton University, BREAD, and NBER)
    Abstract: Fertility change is distinct from other forms of social and economic change because it directly alters the size and composition of the next generation. This paper studies how changes in population composition over the fertility transition feed back into the evolution of average fertility across generations. Theory predicts that changes in the relationship between human capital and fertility first weaken and then strengthen fertility similarities between mothers and daughters, a process that first promotes and then restricts aggregate fertility decline. Consistent with these predictions, microdata from 40 developing countries over the second half of the 20th century show that intergenerational fertility associations strengthen late in the fertility transition, due to the alignment of the education-fertility relationship across generations. As fertility approaches the replacement level, the strengthening of these associations reweights the population to raise aggregate fertility rates, pushing back against aggregate fertility decline.
    JEL: J10 O10 O40
    Date: 2017–01
  3. By: Stefano BOSI; David DESMARCHELIER; Manh Hung NGUYEN
    Abstract: Biologists point out that biodiversity loss contributes to promote the transmission of diseases. In epidemiology, this phenomenon is known as dilution effect. Our paper aims to model this effect in an economic model where the spread of an infectious disease is considered. More precisely, we embed a SIS model into a Ramsey model (1928) where a pollution externality coming from production affects the evolution of biodiversity. Biodiversity is assimilated to a renewable resource and affects the infectivity of the disease (dilution effect). A green tax is levied on production at the firm level to finance depollution according to a balanced budget rule. In the long run, a disease-free and an endemic regime are possible. We focus only on the second case and we find that the magnitude of the dilution effect determines the number of steady states. When the dilution effect remains low, there are two steady states with high and low biodiversity respectively. Conversely, when the dilution effect becomes high, the steady state is always unique. Moreover, under a low dilution effect, a higher green-tax rate always impairs biodiversity at the low steady state, while this green paradox is over under a high dilution effect. In the short run, limit cycles can arise in both the cases even if only a low dilution effect can lead to the occurrence of Bogdanov-Takens and generalized Hopf bifurcations.
    Keywords: dilution effect, pollution, SIS model, Ramsey model, local bifurcations of codimension one and two.
    JEL: C61 E32 O44
    Date: 2017
  4. By: Jean Lacroix
    Abstract: Which dimension of economic development spurred support to democracy? This study focuses on industrialization as the dimension triggering the process of “modernization”. It uses a new dataset on Napoleonic plebiscites under the second French Empire (1852-1870). The results in those plebiscites provide a detailed cross-départements (French main administrative units) measure of opposition to autocracy. This study uses the variations in the thriving French modernization to disentangle the effect of industrialization on the vote from the one of other dimensions of economic development. The results show that a ten-percent increase in industrialization reduced the share of “Yes” ballots by 0.4 to 0.7 percentage points in the 1870 plebiscite. An IV strategy using distance to the first city having adopted steam engines, access to coal and waterpower as instruments confirms causality. The baseline results are robust to controlling for other explanations of the vote and to using alternative specifications and estimation methods.
    Keywords: Industrialization; Modernization; Democratic consolidation
    JEL: N43 O14
    Date: 2017–09–15
  5. By: Raouf Boucekkine (Aix-Marseille Univ. (Aix-Marseille School of Economics), CNRS, EHESS and Centrale Marseille); Blanca Martínez (Universidad Complutense de Madrid); José Ramón Ruiz-Tamarit (Universitat de Valencia, Spain, and IRES Department of Economics, Université Catholique de Louvain, Belgium)
    Abstract: This paper revisits the optimal population size problem in a continuous time Ramsey setting with costly child rearing and both intergenerational and intertemporal altruism. The social welfare functions considered range from the Millian to the Benthamite. When population growth is endogenized, the associated optimal control problem involves an endogenous effective discount rate depending on past and current population growth rates, which makes preferences intertemporally dependent. We tackle this problem by using an appropriate maximum principle. Then we study the stationary solutions (balanced growth paths) and show the existence of two admissible solutions except in the Millian case. We prove that only one is optimal. Comparative statics and transitional dynamics are numerically derived in the general case.
    Keywords: Optimal population size, population ethics, optimal growth, endogenous discounting, optimal demographic transitions
    JEL: C61 C62 J1 O41
    Date: 2017–08
  6. By: Yun K. Kim; Alan G. Isaac
    Abstract: Building upon Isaac and Kim (2013) and Charles (2008a), we incorporate endogenous retention behavior of firms into a a stock-flow consistent neo-Kaleckian growth model with both consumer and corporate debt. We adopt a logistic endogenous retention ratio, which is a realistic representation of firms retention behavior. We then explore the macrodynamic ramifications. Consumer credit expansion can enhance the stability of the system. Higher interest has a destabilizing effect, and can induce a rather dramatic instability. More prudent firms financial behavior by relying more on their retained earnings reduces the stability of the system although it promotes growth.
    Keywords: Consumer debt, corporate debt, endogenous retention ratio, stability
    JEL: E12 E44 O41
    Date: 2017–09
  7. By: Laura Recuero Virto (MNHN and MAEDI); Denis Couvet (MNHN)
    Abstract: This paper examines whether natural capital is a robust determinant of economic growth, distinguishing the contribution of direct and indirect effects in renewable and non-renewable natural capital. Our hypothesis is that renewable natural capital may have a rather indirect but more important impact on economic growth than non-renewable natural capital, particularly through human well-being. In contrast, non-renewable natural capital can be a source of immediate financial wealth, but can have adverse social and environmental effects. To test this hypothesis we use a data set on 83 countries for the period 1960-2009 to compare the relevance of proximate and fundamental theories to explain economic growth. We find some evidence of an indirect negative impact of renewable natural capital in wealth on economic growth through through human well-being and, more precisely, population growth rates and fertility. This is particularly the case for countries with higher levels of human development. In contrast, the share of non-renewable natural capital in wealth has a direct positive impact on economic growth in countries with lower income inequality and higher institutional quality. This finding reflects the effect of capital accumulation in the domestic economy, as capacity constrainst are relaxed. Finally, countries with higher income per capita, higher human development and higher institutional quality have a higher share of higher renewable natural capital per capita, although they also have a lower share of lower renewable natural capital in wealth. Such result emphasises that renewable natural capital is very necessary for people (per capita), hence isa primary concern for empowered countries, although such capital contributes less to wealth, and economic growth, in these countries . Our results question the way ‘wealth’ and economic growth are defined in economics when the effect of natural capital is examined.
    Keywords: natural capital, economic growth, renewable, non-renewable,
    JEL: O44 O47 Q20 Q30 Q32
    Date: 2017–09

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