nep-gro New Economics Papers
on Economic Growth
Issue of 2017‒10‒01
eleven papers chosen by
Marc Klemp
Brown University

  1. Wheat Agriculture and Family Ties By James B. Ang; Per G. Fredriksson
  2. Ethnic Differences in Demographic Behavior in the United States: What Can We Learn from Vital Statistics about Inequality? By Michael R. Haines
  3. Uncovering The Deep Roots of Conflict By James B. Ang; Satyendra K. Gupta
  4. Optimal population growth as an endogenous discounting problem: The Ramsey case By Raouf BOUCEKKINE; Blanca MARTINEZ; J.R. RUIZ-TAMARIT
  5. Which Tail Matters? Inequality and Growth in Brazil By Stephan Litschig; Maria Lombardi
  6. Big or small cities? On city size and economic growth By Frick, Susanne A.; Rodríguez-Pose, Andrés
  7. The contribution of education to economic growth: Empirical analysis in the Middle East and North Africa region By Sbaouelgi, Jihène
  8. The Productivity Slowdown and the Declining Labor Share: A Neoclassical Exploration By Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  9. Receptivity and Innovation By Furukawa, Yuichi; Lai, Tat-kei; Sato, Kenji
  10. "Public debt and economic growth: Further evidence euro area" By Marta Gómez-Puig; Simón Sosvilla-Rivero
  11. Life after default: Private vs. official sovereign debt restructurings By Silvia, Marchesi; Tania, Masi

  1. By: James B. Ang (Department of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.); Per G. Fredriksson (Department of Economics, University of Louisville, Louisville, KY 40292, USA.)
    Abstract: Several recent contributions to the literature have suggested that the strength of family ties is related to various economic and social outcomes. For example, Alesina and Giuliano (2014) highlight that the strength of family ties is strongly correlated with lower GDP and lower quality of institutions. However, the forces shaping family ties remain relatively unexplored in the literature. This paper proposes and tests the hypothesis that the agricultural legacy of a country matters for shaping the strength of its family ties. Using data from the World Values Survey and the European Values Study, the results show that societies with a legacy in cultivating wheat tend to have weaker family ties. Analysis at the sub-national level (US data) and the country level corroborate these ?ndings. The estimations allow for alternative hypotheses which propose that pathogen stress and climatic variation can potentially also give rise to the formation of family ties. The results suggest that the suitability of land for wheat production is the most influential factor in explaining the variation in the strength of family ties across societies and countries.
    Keywords: Family ties; agriculture; long-run comparative development
    JEL: O1 Q1 Z1
    Date: 2017–05
  2. By: Michael R. Haines
    Abstract: This paper looks at the fertility and mortality experience of racial and ethnic groups in the United States from the early 20th century to the present. The first part consist of a description and critique of the racial and ethnic categories used in the federal census and in the published vital statistics. The second part looks at these two dimensions of demographic behavior. There has been both absolute and relative convergence of fertility across groups. It has been of relatively recent origin and has been due, in large part, to stable birth rates for the majority white population combined with declining birth rates for blacks and the Asian-origin, Hispanic-origin, and American Indian populations. This has not been true for mortality. The black population has experienced absolute convergence but relative deterioration in mortality (neonatal and infant mortality, maternal mortality, expectation of life at birth, and age-adjusted death rates), in contrast to the American Indian and Asian-origin populations. The Asian-origin population actually now has age-adjusted death rates significantly lower than those for the white population. The disadvantaged condition of the black population and the deteriorating social safety net are the likely origins of this outcome. This is a clear indication of relative inequality, as the black population is not sharing as much in the mortality improvements in recent decades.
    JEL: I14 N12
    Date: 2017–09
  3. By: James B. Ang (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.); Satyendra K. Gupta (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.)
    Abstract: This research establishes that the emergence and persistence of intrastate con ict incidence since 1960 are in uenced by regional agro-ecological factors captured by the extent of variation in crop yield potential. Our results based on cross-country and grid-level analysis indicate that higher potential crop yield variability within a country that is exogenous to both human intervention and regional culture increases the likelihood of intrastate con ict. Our ndings are robust to the inclusion of various geographical, institutional, and potentially confounding economic development correlates.
    Keywords: Intrastate con ict, crop yield, agronomy
    JEL: E02 F50 Q10
    Date: 2017–02
  4. By: Raouf BOUCEKKINE (Aix-Marseille University, CNRS, EHESS, Centrale Marseille, AMSE and IMRA); Blanca MARTINEZ (Department of Economics, Universidad Complutense de Madrid, Spain and Instituto Complutense de Analisis Economico (ICAE)); J.R. RUIZ-TAMARIT (Department of Economic Analysis, Universitat de Valencia, Spain, and IRES Department of Economics, Universite Catholique de Louvain)
    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: 2017–08–29
  5. By: Stephan Litschig (National Graduate Institute for Policy Studies, Tokyo, Japan); Maria Lombardi (University of Gothenburg, Sweden)
    Abstract: We estimate the effect of initial income inequality on subsequent income per capita growth using sub-national data from Brazil over the period 1970-2000. Holding initial income per capita and standard confounders constant, we find that places with higher initial inequality exhibit higher subsequent growth. This effect is entirely driven by the lower tail of the initial income distribution: compared to more equal places, sub-national units with a higher share of income going to the middle quintile at the expense of the bottom quintile grow more rapidly, while places with a higher share of income going to the top quintile at the expense of the middle quintile get no growth boost at all. We document that both physical and human capital accumulation in places with higher inequality in the lower tail of the initial income distribution outpace capital accumulation in more equal places, while inequality in the upper tail of the distribution is uncorrelated with subsequent physical or human capital growth. These results are consistent with theories on credit constraints and setup costs for human and physical capital investments.
    Date: 2017–09
  6. By: Frick, Susanne A.; Rodríguez-Pose, Andrés
    Abstract: Policy-makers and academics frequently emphasize a positive link between city size and economic growth. The empirical literature on the relationship, however, is scarce and uses rough indicators for the size for a country's cities, while ignoring factors that are increasingly considered to shape the relationship. In this paper, we employ a panel of 113 countries between 1980 and 2010 to explore whether (1) there are certain city sizes that are growth enhancing and (2) how additional factors highlighted in the literature impact the city size/growth relationship. The results suggest a non-linear relationship which is dependent on the country's size. In contrast to the prevailing view that large cities are growth-inducing, for the majority of countries relatively small cities of up to 3 million inhabitants are more conducive to economic growth. A large share of the urban population in cities with more than 10 million inhabitants is only growth promoting in countries with an urban population of 28.5 million and more. In addition, the relationship is highly context dependent: a high share of industries that benefit from agglomeration economies, a well-developed urban infrastructure, and an adequate level of governance effectiveness allow countries to take advantage of agglomeration benefits from larger cities.
    Keywords: City size; Economic Growth; enabling factors
    JEL: R11 R12
    Date: 2017–09
  7. By: Sbaouelgi, Jihène
    Abstract: In this paper we will focus on education. Indeed, most theoretical analyzes have confirmed that human capital has a positive and significant effect on growth. The paper aims to examine in time series the causality between human capital and growth in MENA’s region. For this, we carry out our empirical investigation by employing various human capital measures suggested in the literature. The results show that cointegration between education and economic growth exists only in Tunisia, Turkey, Morocco, Iran and Israel. However, in the other countries the causality does not exist because they don’t have effective means to improve their growth.
    Keywords: education; economic growth; causality and cointegration
    JEL: O3 O4
    Date: 2017–09–21
  8. By: Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
    Abstract: We explore the possibility that a global productivity slowdown is responsible for the widespread decline in the labor share of national income. In a neoclassical growth model with endogenous human capital accumulation a la Ben Porath (1967) and capital-skill complementarity a la Grossman et al. (2017), the steady-state labor share is positively correlated with the rates of capital-augmenting and labor-augmenting technological progress. We calibrate the key parameters describing the balanced growth path to U.S. data for the early postwar period and find that a one percentage point slowdown in the growth rate of per capita income can account for between one half and all of the observed decline in the U.S. labor share.
    JEL: E13 E25 J24 O41
    Date: 2017–09
  9. By: Furukawa, Yuichi; Lai, Tat-kei; Sato, Kenji
    Abstract: In this study, we investigate the relationship between receptivity to novelty and innovation. Consumers’ receptivity to novelty, as an individual propensity toward new goods, might be perceived to encourage innovation at the aggregate level unambiguously. On analyzing data from the World Values Survey and the World Intellectual Property Organization, however, we find that there is an inverted U-shaped relationship between average receptivity and innovation at country level; receptivity may not always be conducive to innovation. To capture a mechanism behind this counterintuitive fact, we develop a new dynamic general equilibrium model with the understanding that innovation consists of two separate activities of inventing new goods and introducing them to the society. In our model, consumer receptivity encourages firms to invent but discourages them from introducing. Interacted with population size and the elasticity of substitution, these opposing forces generate a non-monotonic relationship. While economies with moderate receptivity can achieve sustained innovation and thereby long-run growth, those with too much or too little receptivity are likely to be caught in an underdevelopment trap, in which innovations eventually fail. These results suggest a theory that explains the inverted-U.
    Keywords: Openness to novelty; aversion to novelty; underdevelopment traps; endogenous growth; innovation cycles
    JEL: E32 O40 Z10
    Date: 2017–09
  10. By: Marta Gómez-Puig (Risckcenter Research group–IREA. Av. Diagonal 696; 08034 Barcelona,Spain.); Simón Sosvilla-Rivero (Complutense Institute for International Studies, Universidad Complutense de Madrid; 28223 Madrid, Spain.)
    Abstract: This paper empirically investigates the short and long run impact of public debt on economic growth. We use annual data from both central and peripheral countries of the euro area (EA) for the 1961-2013 period and estimate a production function augmented with a debt stock term by applying the Autoregressive Distributed Lag (ARDL) bounds testing approach. Our results suggest different patterns across EA countries and tend to support the view that public debt always has a negative impact on the long-run performance of EA member states, whilst its short-run effect may be positive depending on the country.
    Keywords: Public debt, economic growth, bounds testing, euro area, peripheral euro area countries, central euro area countries. JEL classification: C22, F33, H63, O40, O52.
    Date: 2017–09
  11. By: Silvia, Marchesi; Tania, Masi
    Abstract: This paper studies the relationship between sovereign debt default and annual GDP growth taking into account the depth of a debt restructuring and distinguishing between commercial and o¢ cial sovereign debt restructurings. Analyzing 73 default episodes in 117 countries over the period 1975-2013, we find that defaults are correlated with contraction of short-term output growth. Most importantly, controlling for the severity of the default, we are able to detect a more lasting and negative link between default and growth. While higher private haircuts imply a negative stigma which is associated to lower growth over a longer period, higher amount of official restructuring may have some costs in the short-run, but are associated to an increase in growth in the long run. Using the Synthetic Control Method, we present further evidence for the heterogeneity of the economic impact of debt restructurings, confirming that official and private defaults may have different effects on GDP growth and should then be treated differently.
    Keywords: Haircuts, Output losses, Sovereign defaults
    JEL: F34 G15 H63
    Date: 2017–09–22

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