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on Economic Growth |
| By: | Bakker, Gerben; Crafts, Nicholas; Woltjer, Pieter |
| Abstract: | We develop new aggregate and sectoral Total Factor Productivity (TFP) estimates for the United States between 1899 and 1941 through better coverage of sectors and better-measured labor quality, and find TFPgrowth was lower than previously thought, broadly based across sectors, and strongly variant intertemporally. We then test and reject three prominent claims. First, the 1930s did not have the highest TFP-growth of the twentieth century. Second, TFP-growth was not predominantly caused by four ‘great inventions’. Third, TFPgrowth was not driven indirectly by spillovers from great inventions such as electricity. Instead, the creativedestruction-friendly American innovation system was the main productivity driver |
| Keywords: | productivity growth; total factor productivity; great inventions; spillovers; United States — history |
| JEL: | O51 N0 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:85081&r=gro |
| By: | Wallis, Patrick; Colson, Justin; Chilosi, David |
| Abstract: | Structural transformation is a key indicator of economic development. We present the first time series of male labour sectoral shares for England and Wales before 1800, using a large sample of probate and apprenticeship data to produce national and county-level estimates. England experienced a rapid decline in the share of workers in agriculture between the early seventeenth and the beginning of the eighteenth centuries, associated with rising agricultural and especially industrial productivity; Wales saw few changes. Our results show that England experienced unusually early structural change and highlight the mid-seventeenth century as a turning point. |
| JEL: | N0 F3 G3 |
| Date: | 2017–09–28 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:84510&r=gro |
| By: | Gary Jefferson (Brandeis University) |
| Abstract: | By resolving the knife-edge condition in Solow’s neoclassical growth model as interpreted by Uzawa, in which a production technology with a non-unitary substitution elasticity is unable to accommodate capital-augmenting technical change, this paper offers a transformative approach to the analysis of economic growth and technical change. With nature fixing the exogenous supplies of both capital and labor, consistent with the Law of the Conservation of Matter, investment in both physical and human capital becomes constrained to equal quantities of creation and destruction; that is, Hicks invention-neutral technical change creates new vintages that replace obsolete vintages of physical matter. Contrasted with the Solow model in which the steady-state rate of growth is unaffected by the savings rate, in this model the exogenous savings rate drives every dimension of the Schumpeterian creative-destruction process – rates of innovation, depreciation, and investment. Rising living standards result entirely from technology deepening; capital deepening becomes a misnomer. The model is a literal implementation of Shumpeterian growth in which creation and destruction are precisely balanced in the steady state, driven by the warranted rates of savings, technology development, and investment. The steady state is that in which savings, technical change, depreciation, and investment are aligned, so that creation and destruction are precisely balanced consistent with nature’s fixed endowment. |
| Date: | 2017–09 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:113&r=gro |
| By: | Cummins, Neil |
| Abstract: | I analyze the adult age at death of 115,650 European nobles from 800 to 1800. Longevity began increasing long before 1800 and the Industrial Revolution, with marked increases around 1400 and again around 1650. Declines in violent deaths from battle contributed to some of this increase, but the majority must reflect other changes in individual behavior. There are historic spatial contours to European elite mortality; Northwest Europe achieved greater adult lifespans than the rest of Europe even by 1000 ad. |
| JEL: | N0 |
| Date: | 2017–06–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:83576&r=gro |
| By: | Khobai, Hlalefang; Mavikela, Nomahlubi |
| Abstract: | The Ricardian-Heckscher-Ohlin trade model drawn from Solow's (1957) model points out that since the country allocates its resources more efficiently after opening up based on its comparative advantages that openness to international trade will bring only a one-time increase in output, therefore having no implications for long-run growth. This led to this study investigating the causal relationship between economic growth and trade openness in Argentina covering the period between 1970 and 2016. Foreign direct investments and capital are incorporated as additional variables to form a multivariate framework. The findings from the ARDL bounds test validated the existence of a long run relationship between economic growth, trade openness, foreign direct investment and capital in Argentina. The results further indicated that there is a long run causality flowing from trade openness, foreign direct investment and capital to economic growth. These results presents a fresh perspective to trade policy makers in Argentina |
| Keywords: | Trade Openness; Economic growth; ARDL; VECM; Argentina |
| JEL: | F1 F13 F14 F16 F18 |
| Date: | 2017–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82463&r=gro |
| By: | Gindrute Kasnauskiene (Vilnius university); Karol Michnevich (Vilnius university) |
| Abstract: | Population ageing in a backdrop of growing average life expectancy can be seen in many advanced economies, but the rapid pace of these demographic changes in Central and Eastern Europe (CEE) makes it a pressing matter for the region. We investigate these two phenomenon and compare results with prior research to determine their separate and combined effect on output growth in a panel regression model using Eurostat data for the period 1996 to 2013. Our findings point to both life expectancy and population ageing exerting a statistically significant, overlapping effect on real output. The conclusions of our research demonstrate the utility of augmenting macroeconomic models with a demographics-sensitive component. |
| Keywords: | demographics, life expectancy, population ageing, economic growth, CEE countries |
| JEL: | E10 J10 J11 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:5807776&r=gro |
| By: | Francesco Caselli (Centre for Macroeconomics (CFM); Centre For Economic Policy Research; London School of Economics and Political Science (LSE)); Antonio Ciccone (Barcelona Graduate School of Economics; Centre For Economic Policy Research; Mannheim University; Universitat Pompeu Fabra) |
| Abstract: | Benjamin Jones (2014) revisits the measurement of human capital for the purposes of development accounting. “Traditional” (Jones’s terminology) accounting treats workers with different educational attainment as perfect substitutes. Jones considers development accounting when workers with different schooling are imperfect substitutes. His main result is that the perfect-substitute case provides a lower bound for the magnitude of human-capital differences across countries, and that, using plausible values for the elasticity of substitution between workers with different educational attainment, measured human capital variation can be boosted to the point that factors of production account for the totality of the variation in income across countries. This finding is in sharp contrast with the previous development accounting literature, which could only explain about half of the cross-country income variation with production factors, with the other half left to generic efficiency (technology) differences (Klenow and Rodriguez-Clare, 1997; Hall and Jones, 1999; Caselli, 2005). If differences in human capital could truly account for all the variation in income across countries, as Jones's calculations indicate, the implications would be far reaching. The academic and policy debate would have to shift away from its current focus on technology, legal and political institutions, and other features of the economic environment. Instead, the focus should be on the determinants of the skills embedded in workers. In this comment, we show that the amplification of cross-country human capital differences achieved by Jones, and hence his success at removing the unexplained component of income differences, is entirely due to an assumption that the relative wage of skilled workers is solely determined by attributes of workers (once the supply of skilled workers is accounted for). If, as we argue, skill premia are also influenced by technology, institutions, and other features of the economic environment, cross-country differences in human capital as measured by Jones will embed differences in these technological, institutional, and other attributes. As a result, Jones’s conclusion that human capital can account for all the variation in income across countries is unwarranted. |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:1733&r=gro |
| By: | Matheus Assaf |
| Abstract: | Textbook narratives usually describe the Ramsey-Cass-Koopmans model of optimal growth as an important development over Solow’s model. The constant saving rate rule of the latter is replaced by an endogenous determination of savings rates based on utility maximization behaviour of the former. However, neither Tjalling Koopmans nor David Cass were trying to upgrade Robert Solow’s modelling of savings with their contributions. Koopmans was pushing for utilitarian analysis to study economic growth within the activity analysis community, with the help of Edmond Malinvaud. Cass and his colleagues at Stanford’s graduate program were exploring the multiple applications of the maximum principle on economic growth models, influenced mostly by Hirofumi Uzawa. When the group of Stanford students graduated and moved to different departments, Karl Shell brought his interest on optimal growth and technical progress to the MIT. There, he organized a conference in 1965-66 that united his Stanford colleagues and MIT young scholars to discuss optimal growth theory. The conference represented the formation of a scientific community that consolidated optimal growth theory in the second half of the 1960 decade. The link between optimal growth theory and Solow’s model was consolidated by this community of young students. Most of them were advised by Solow. This paper plans to shed some light on the importance of the MIT in the history of optimal growth theory and to show how the standard textbook narrative is a MIT-only story. |
| Keywords: | Optimal growth; History of Economic Thought; David Cass; Robert Solow. |
| JEL: | B22 B23 B29 |
| Date: | 2017–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:spa:wpaper:2017wpecon20&r=gro |
| By: | Or Levkovich (Department of Spatial Economics, VU University); Jan Rouwendal (Tinbergen Institute); Jos van Ommeren (Tinbergen Institute) |
| Abstract: | We study the role of land development restrictions for the effects of highway expansion on the spatial distribution of population. We demonstrate that these restrictions strongly interfered with the effects of highways in the Netherlands. Introducing an IV approach to address endogenous interaction variables, our findings show that new highways accelerated population growth in peripheral areas, but had no such effect in central cities and suburban municipalities. We find that due to development restrictions near larger cities, the highway expansion caused a ‘leapfrog’ pattern, in which suburban growth skipped development-restricted areas and expanded into farther located peripheral areas. |
| Keywords: | highways; development restrictions; population redistribution; suburbanization; instrumental variables; endogenous interaction variables |
| JEL: | R11 R58 R52 |
| Date: | 2017–11–17 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20170109&r=gro |
| By: | Schneider, Eric B.; Ogasawara, Kota |
| Abstract: | This paper assesses how the disease environment in interwar Japan influenced children’s growth and health. The data is drawn from government records from 1929 to 1939 which report the average heights of boys and girls in school at each age (6-21) for each of Japan’s 47 prefectures. We test the influence of disease in two ways. First, we test the influence of the disease environment at birth, proxied by the infant mortality rate, on the cohort growth pattern of children using the SITAR model to parameterise the growth pattern. In addition, we use a bilateral-specific fixed effects model to understand how disease instantaneously influenced growth controlling for prefecture-birth cohort effects. Our results suggest that health conditions in early life did not have a strong influence on the growth pattern of children in Japan. However, we do find a significant and economically meaningful instantaneous effect of the infant mortality rate on child height at ages 6-11 for both boys and girls. This suggests that child morbidity was very important to the increase in stature during interwar Japan, but it also suggests that the emphasis placed on preventing child stunting in the first thousand days in the modern development literature may be misplaced. The secular increase in height in interwar Japan was more strongly influenced by cumulative responses to the health environment across child development rather than being simply the outcome of improving cohort health. |
| Keywords: | child growth; disease; health transition |
| JEL: | O53 N0 I1 |
| Date: | 2017–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:wpaper:84066&r=gro |
| By: | Ngoc-Sang PHAM (FERDI); Thi Kim Cuong PHAM (FERDI) |
| Abstract: | This paper introduces a theoretical framework for studying the effectiveness of aid for a recipient country, receiving aid to finance its public investment. It contributes to the debate on the nexus between aid and economic growth and in particular on the conditionality of aid effects. Focusing on autonomous technology, government effort, corruption in the use of aid, fixed cost and efficiency in public investment, we can distinguish 4 levels of circumstances following which, the same aid flows may have very different effects. Given donor’s rules, we determine conditions under which the foreign aid can generate economic growth in the long run for the recipient. We also discuss the conditions leading to an economic take-off and an escape from the poverty trap. Analyses of the dynamics of capital also give conditions for a convergence towards a middle income trap or endogenous fluctuations around it. |
| Keywords: | aid effectiveness, economic growth, fluctuation, poverty trap, public investment |
| JEL: | H50 O19 O41 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3898&r=gro |
| By: | Qichun He (Central University of Finance and Economics); Heng-fu Zou (Central University of Finance and Economics; World Bank) |
| Abstract: | The government reaps seigniorage revenue from higher rates of money growth, hiring away more workers from entrepreneurs (the government crowding-out effect). There is also a positive seigniorage effect when part of the revenue goes to entrepreneurs, acting as a subsidy to R&D. When the government retains a larger share of the revenue, the government crowding-out effect dominates, and inflation retards growth. When entrepreneurs get the larger share, the seigniorage effect dominates, and inflation increases growth. Both OLS (ordinary least squares) and IV (instrumental variable) regressions using time-series data during 1979–2014 in China show that differenced inflation (to ensure stationarity) has a significantly positive effect on growth. When we use the level of inflation, we find that a 1 percentage point increase in annual inflation would bring a 0.53 percentage point increase in annual growth of per worker real GDP. The robust, causal effect of inflation on growth in China provides support for our theory. |
| Keywords: | Seigniorage revenue, R&D, Augmented Solow model, Instrumental variables estimation |
| JEL: | R12 H87 C73 |
| Date: | 2016–09 |
| URL: | http://d.repec.org/n?u=RePEc:cuf:wpaper:601&r=gro |
| By: | Khobai, Hlalefang; Le Roux, Pierre |
| Abstract: | This study investigates the causal relationship between renewable energy consumption and economic growth in South Africa. It incorporates carbon dioxide emissions, capital formation and trade openness as additional variables to form a multivariate framework. Quarterly data is used for the period 1990 – 2014 and is tested for stationarity using the Augmented Dickey Fuller (ADF), Dickey Fuller Generalised Least Squares (DF-GLS) and Phillips and Perron (PP) unit root tests. The study employs the Autoregressive distributed lag (ARDL) model to examine the long run relationship among the variables. Lastly, the study determines the direction of causality between the variables using the Vector Error Correction Model (VECM). The results validated an existence of a long run relationship between the variables. Moreover, a unidirectional causality flowing from renewable energy consumption to economic growth was established in the long run. The short run results suggested a unidirectional causality flowing from economic growth to renewable energy consumption. The findings of the study suggest that an appropriate and effective public policy is required in the long run, while considering sustainable economic growth and development |
| Keywords: | Renewable energy consumption; Economic growth; Causality; South Africa |
| JEL: | Q2 Q21 Q27 Q4 Q42 Q43 Q48 |
| Date: | 2017–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82464&r=gro |
| By: | Thi Kim Cuong PHAM (FERDI); Ngoc-Sang PHAM (FERDI) |
| Abstract: | This paper introduces a theoretical framework for studying the effectiveness of aid for a recipient country, receiving aid to finance its public investment. It contributes to the debate on the nexus between aid and economic growth and in particular on the conditionality of aid effects. Focusing on autonomous technology, government effort, corruption in the use of aid, fixed cost and efficiency in public investment, we can distinguish 4 levels of circumstances following which, the same aid flows may have very different effects. Given donor’s rules, we determine conditions under which the foreign aid can generate economic growth in the long run for the recipient. We also discuss the conditions leading to an economic take-off and an escape from the poverty trap. Analyses of the dynamics of capital also give conditions for a convergence towards a middle income trap or endogenous fluctuations around it. |
| Keywords: | aid effectiveness, economic growth, fluctuation, poverty trap, public investment |
| JEL: | H50 O19 O41 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:3895&r=gro |
| By: | Grinis, Inna |
| Abstract: | Policymakers and investors often conceptualize trend growth as simply a medium/long term average growth rate. In practice, these averages are usually taken over arbitrary periods of time, thereby ignoring the large empirical growth literature which shows that doing so is inappropriate, especially in developing countries where growth is highly unstable. This paper builds on this literature to propose an algorithm, called "iterative Fit and Filter" (iFF), that extracts the trend as a sequence of medium/long term growth averages. iFF separates important countryspecific historical episodes and trend growth durations - number of years between two consecutive trend growth shifts, vary substantially across countries and over time. We relate the conditional probabilities of up and down-shifts in trend growth next year to the country's current growth environment, level of development, demographics, institutions, economic management and external shocks, and show how both iFF and the predictive model could be employed in practice |
| Keywords: | Economic Growth; Duration Analysis; Trend Shifts; Trend Extraction |
| JEL: | J1 |
| Date: | 2017–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:85126&r=gro |