nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒01‒01
seven papers chosen by
Marc Klemp
University of Copenhagen

  1. Can HIV alter the quantity-quality switch and delay the fertility transition in Sub-Saharan Africa? By Luca Gori; Enrico Lupi; Piero Manfredi; Mauro Sodini
  2. Technological change, energy, environment and economic growth in Japan By Galina Besstremyannaya; Richard Dasher; Sergei Golovan
  3. Longevity-induced vertical innovation and the tradeoff between life and growth By Baldanzi, Annarita; Prettner, Klaus; Tscheuschner, Paul
  4. Labor Market Regulations and Growth By Oleg Badunenko;
  5. Corruption and Economic Development By Sule Akkoyunlu; Debora Ramella
  6. Investing in Human Capital to Boost Growth! By Caroleo, Floro Ernesto; Pastore, Francesco
  7. Indebtedness in the EU: a drag or a catalyst for growth? By Mika, Alina; Zumer, Tina

  1. By: Luca Gori (Department of Political Science, University of Genoa); Enrico Lupi (DEF, University of Rome "Tor Vergata"); Piero Manfredi (Department of Economics and Management, University of Pisa); Mauro Sodini (Department of Economics and Management, University of Pisa)
    Abstract: According to the conventional theory of the demographic transition, mortality decline has represented the major trigger for fertility decline and eventually sustained economic development. In Sub-Saharan Africa (SSA), the HIV/AIDS epidemic has had a devastating impact on mortality, by dramatically reversing, in high HIV-prevalence countries, the long-term positive trend in life expectancies. Despite the fact that SSA as a whole is suffering a delayed and slow fertility transition compared to other world’s regions, and despite evidence for halting or even reverting fertility decline in countries with severe HIV epidemics, there seems to be little concern amongst international policy makers about the ultimate impact that HIV might have on SSA fertility. This work reports model-based evidence of the potential for a HIV-triggered reversal of fertility in high HIV-prevalent SSA countries induced by the fall in education and human capital investments following the drop in life expectancy for young adults. This eventually breaks down the virtuous circle promoting the switch quantity-to-quality of children. This result suggests that the current evidence on fertility halting and declining education in high HIV-prevalent SSA countries should be seriously taken into consideration to prioritise current international interventions.
    Keywords: Sub-Saharan Africa, fertility transition, quantity-quality switch, HIV/AIDS epidemics, human capital accumulation, fertility reversal.
    JEL: J11 J13 O1 O41
    Date: 2017–12–08
  2. By: Galina Besstremyannaya (CEFIR at New Economic School); Richard Dasher (Stanford University); Sergei Golovan (New Economic School)
    Abstract: A considerable amount of research has shown that that carbon tax combined with research subsidy may be regarded as an optimal policy in view of diffusing low carbon technologies for the benefit of the society. The paper exploits the macro economic approach of the endogenous growth models with technological change for a comparative assessment of these policy measures on the economic growth in the US and Japan in the medium and the long run. The results of our micro estimates reveal several important differences across the Japanese and US energy firms: lower elasticity of innovation production function in R&D expenditure, lower probability of a radical innovation, and larger advances of dirty technologies in Japan. This may explain our quantitative findings of stronger reliance on carbon tax than on research subsidies in Japan relative to the US.
    Keywords: endogenous growth, technological change, innovation, carbon tax, energy
    JEL: O11 O13 O47 Q43 Q49
    Date: 2017–12
  3. By: Baldanzi, Annarita; Prettner, Klaus; Tscheuschner, Paul
    Abstract: We analyze the economic growth effects of rising longevity in a framework of endogenous growth driven by quality-improving innovations. We show that a rise in longevity raises savings and thereby reduces the market interest rate. Since the monopoly profits generated by a successful innovation are discounted by the endogenous market interest rate, this raises the net present value of innovations, which, in turn, fosters R&D. The associated increase in the employment of scientists leads to faster technological progress and a higher long-run economic growth rate. From a welfare perspective, we show that the direct effect of an increase in life expectancy on lifetime utility is much larger than the indirect effect of the induced higher consumption due to faster economic growth. Consequently, the debate on rising health care expenditures should not predominantly be based on the growth effects of health care.
    Keywords: long-run growth,vertical innovation,increasing life expectancy,welfare effects of changing longevity,size of health-care sectors
    JEL: J11 J17 O31 O41
    Date: 2017
  4. By: Oleg Badunenko (Portsmouth Business School);
    Abstract: This chapter builds a model in which labor market regulations influence labor productivity growth through labor market. The proposed model decomposes labor productivity growth into components attributable to (i) change in efficiency, (ii) technological change, (iii) physical capital deepening, (iv) human capital accumulation, and (v) labor market regulations change. The empirical analysis using data from the Penn World Tables and Economic Freedom of the World Data is performed for 1970-1995 and 1995-2014. The findings can be summarized as follows. First, physical capital deepening is the major driving force behind productivity growth over the entire period. Labor market regulations change contributing next to nothing during 1970-1995, becomes second most important force of economic growth after 1995. Second, relatively rich nations benefit more from labor market regulations change than relatively poor nations. Finally, the contribution of labor market regulations change to growth is stronger for countries with less liberalized labor markets.
    Keywords: Data Envelopment Analysis, Efficiency, Economic Freedom of the World Data, Economic Growth, Income Distribution, Labor Market, Labor Market Regulations, Penn World Tables, Physical capital, Productivity
    JEL: D24 C14 O47 J21
    Date: 2017–12–19
  5. By: Sule Akkoyunlu (İktisadi ve İdari Bilimler Fakültesi, ODTU, Turkey; The Rimini Centre for Economic Analysis; Department of Economics, Wilfrid Laurier University, Canada); Debora Ramella (Università degli Studi di Torino, Italy)
    Abstract: This study investigates the impact of openness to trade and corruption on economic development for a cross-section of 143 countries for the year 2000 by analysing the effects of trade openness and corruption on income, productivity, innovation, and income inequality. Institutional, cultural and geographical factors, and country size are controlled for in the analysis. An instrumental variable approach has been adopted in order to address the endogeneity of corruption and openness to trade. The age of democracy and gravity-based predictors are chosen as the instruments for corruption and openness to trade, respectively. The estimates show that corruption negatively affects income per capita, productivity, and innovation, while it does not significantly impact income inequality (Gini). The control of corruption and the openness to trade affect output per worker through the total factor productivity. Both the control of corruption and openness to trade are statistically significant determinants of the 90/10 income gap. Landlockedness affects Gini Index directly, even after controlling for trade and corruption. These findings have important policy implications. For example, on the basis of the estimates, if Botswana improved its control of corruption to reach the level of Finland, its per capita income would rise by 2.7 times.
    Keywords: Trade, Corruption, Economic Development, Productivity, Innovation and Inequality
    JEL: D73 F00 F10 O11 O40
    Date: 2017–12
  6. By: Caroleo, Floro Ernesto (University of Naples Parthenope); Pastore, Francesco (Università della Campania Luigi Vanvitelli)
    Abstract: The Italian economy performs well below the EU average. The reason is a dramatic and persistent low rate of investment, always invoked but never supported by national and supra-national institutions. However, investment to increase the quantity and quality of human capital is key to boost economic growth and cannot be achieved without adequate financial resources. At the same time, the educational system needs to relaunch university reforms (including the Gelmini and 3+2 reforms) which have been unsuccessful so far because they were poorly implemented. Last but not least, more and better ties between the educational system and the labor market should be developed as soon as possible.
    Keywords: public investment, aggregate human capital, economic growth, educational reforms, 3+2 University Reform
    JEL: E22 E24 H54 I25 I28 J24
    Date: 2017–11
  7. By: Mika, Alina; Zumer, Tina
    Abstract: We study the relationship between debt and growth in EU countries in the years 1995-2015. We investigate the debt-growth nexus in two alternative empirical set-ups: the traditional cross-county panel regressions and mean group estimations. We find evidence of a positive long-run relationship between private sector indebtedness and economic growth, and a negative relationship between public debt and long-run growth across EU countries. However, the more immediate impact of private sector debt on growth is found to be negative, and positive for the public sector debt. We find no conclusive evidence for a common debt threshold within EU countries, neither for the private nor for the public sector, but some indication of a non-linear effect of household debt. JEL Classification: O47, N14, H60
    Keywords: cross-sectional dependence, debt, European Union countries, panel, threshold
    Date: 2017–12

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