nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒05‒07
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Capital-Skill Complementarity and the Emergence of Labor Emancipation By Ashraf, Quamrul; Cinnirella, Francesco; Galor, Oded; Gershman, Boris; Hornung, Erik
  2. Dancing with the Stars: Innovation Through Interactions By Ufuk Akcigit; Santiago Caicedo; Ernest Miguelez; Stefanie Stantcheva; Valerio Sterzi
  3. The principle of population vs. the Malthusian trap: A classical retrospective and resuscitation By Lüger, Tim
  4. Build It, and They Will Come? Secondary Railways and Population Density in French Algeria By Maravall Buckwalter, Laura
  5. A VAR evaluation of classical growth theory By Lüger, Tim
  6. The Napoleonic Wars: A Watershed in Spanish History? By Santiago Caballero, Carlos; Prados de la Escosura, Leandro
  7. Optimal taxes on capital in the OLG model with uninsurable idiosyncratic income risk By Krueger, Dirk; Ludwig, Alexander
  8. Globalization, economic growth, and spillovers: A spatial analysis By Ahmad, Mahyudin
  9. The Farmer, the Blue-collar, and the Monk: Understanding Economic Development through Saturations of Demands and Non-Homothetic Productivity Gains By Elie Gray; André Grimaud; David Le Bris
  10. Refugee Resettlement, Redistribution and Growth By Leonid V. Azarnert
  11. Endogenous growth and global divergence in a multi-country agent - based model By Giovanni Dosi; Andrea Roventini; Emmanuele Russo

  1. By: Ashraf, Quamrul; Cinnirella, Francesco; Galor, Oded; Gershman, Boris; Hornung, Erik
    Abstract: This paper advances a novel hypothesis regarding the historical roots of labor emancipation. It argues that the decline of coercive labor institutions in the industrial phase of development has been an inevitable by-product of the intensification of capital-skill complementarity in the production process. In light of the growing significance of skilled labor for fostering the return to physical capital, elites in society were induced to relinquish their historically profitable coercion of labor in favor of employing free skilled workers, thereby incentivizing the masses to engage in broad-based human capital acquisition, without fear of losing their skill premium to expropriation. In line with the proposed hypothesis, exploiting a plausibly exogenous source of variation in proto-industrialization across regions of nineteenth-century Prussia, the initial abundance of elite-owned physical capital that also came to be associated with skill-intensive industrialization is shown to have contributed to the subsequent intensity of de facto serf emancipation.
    Keywords: capital-skill complementarity; demand for human capital; emancipation; Industrialization; Labor coercion; nineteenth-century Prussia; physical capital accumulation; serfdom
    JEL: J24 J47 N13 N33 O14 O15 O43
    Date: 2018–03
  2. By: Ufuk Akcigit; Santiago Caicedo; Ernest Miguelez; Stefanie Stantcheva; Valerio Sterzi
    Abstract: An inventor's own knowledge is a key input in the innovation process. This knowledge can be built by interacting with and learning from others. This paper uses a new large-scale panel dataset on European inventors matched to their employers and patents. We document key empirical facts on inventors' productivity over the life cycle, inventors' research teams, and interactions with other inventors. Among others, most patents are the result of collaborative work. Interactions with better inventors are very strongly correlated with higher subsequent productivity. These facts motivate the main ingredients of our new innovation-led endogenous growth model, in which innovations are produced by heterogeneous research teams of inventors using inventor knowledge. The evolution of an inventor's knowledge is explained through the lens of a diffusion model in which inventors can learn in two ways: By interacting with others at an endogenously chosen rate; and from an external, age-dependent source that captures alternative learning channels, such as learning-by-doing. Thus, our knowledge diffusion model nests inside the innovation-based endogenous growth model. We estimate the model, which fits the data very closely, and use it to perform several policy exercises, such as quantifying the large importance of interactions for growth, studying the effects of reducing interaction costs (e.g., through IT or infrastructure), and comparing the learning and innovation processes of different countries.
    JEL: H25 L16 O31 O33 O41
    Date: 2018–03
  3. By: Lüger, Tim
    Abstract: In spite of two centuries of extensive debate, a consistent framework of the classical theory of population on which economists can universally agree has not been established. This means that either the theory lacks consistency or it has been misunderstood in important ways. This paper attempts to settle this issue by arguing that the latter was the case, revealing prevailing misconceptions. Since a large amount of these misconceptions most probably arose from the lack of a consistent nomenclature, the paper intends to clarify the classical theory of population by employing unambiguous definitions of the principle of population, the Malthusian trap, positive checks and preventive checks to population. The classical theory of population can then be applied to analyze the transition from economic stagnation to economic growth. As a result, numerous current theories trying to explain the transition to growth that are based on an increase of production will prove secondary when compared to the great preventive check.
    Keywords: Demographic Transition,Malthusian Trap,Unified Growth Theory,Classical Growth Theory,Positive Checks,Preventive Checks
    JEL: B12 J1 N3 O11
    Date: 2018
  4. By: Maravall Buckwalter, Laura
    Abstract: This paper estimates the effect of gaining access to railways on settler and indigenous population densities in nineteenth-century French Algeria. A growing amount of research shows that railway expansion allowed previously marginalized regions to participate in international trade and thereby to boost growth. However, few studies point out that railways increased marginalization in areas that did not gain access to the infrastructure or that did not have the required geographic characteristics needed to engage in international markets. By taking advantage of unique territorial population data and digitized historical colonization maps in the Constantine region, this paper measures the effect of gaining access in relatively isolated areas where the infrastructure arrived later using a differences-in-differences combined with a propensity score matching methodology. Results show that the indigenous population responded positively to rail infrastructure only in the regions where settler density was already high, while the settler population growth did not respond to the new infrastructure. These results are consistent with an additional IV strategy. A more detailed analysis of freight and passenger transport shows that the potential gains were restricted by tariffs, which mirrored Constantine's geographical restrictions; that is, limited fertile land and the vulnerability of agricultural production to climate.
    Keywords: Algeria; Population Density; Agriculture; Transport and Trade; Colonial Railways
    JEL: Q17 O18 N9 N7 N5
    Date: 2018–04–24
  5. By: Lüger, Tim
    Abstract: Over the past two decades, there have been numerous attempts in economic theory to model the historical regime of a Malthusian trap as well as the transition to growth in one coherent framework, or in other words, a unified growth theory. However, in most of these models, an important effect suggested by Malthus has been frequently omitted. By including what he had called "the great preventive check" in the traditional Malthusian model which is based on the principle of population, the principle of diminishing returns and the principle of labor division, the transition can be modelled in a very simple dynamic macroeconomic framework. The aim of this paper is to first construct and calibrate the suggested classical model and to eventually employ a conventional VAR-Method to provide evidence of the above principles using country-specific annual historical data on crude birth rate, crude death rate and GDP per capita growth rate. As a result, it is argued that emerging economies follow a universal macroeconomic pattern of development. A decreasing death rate is succeeded by a decreasing birth rate which at the same time induces GDP per capita to rise sustainably. The correspondingly advanced microeconomic theory suggests that increasing life expectancy tends to create a demographic structure that is much less prone to overpopulation.
    Keywords: Demographic Transition,Malthusian Trap,Unified Growth Theory,Classical Growth Theory,Vectorautoregression
    JEL: B12 C32 J11 O11
    Date: 2018
  6. By: Santiago Caballero, Carlos; Prados de la Escosura, Leandro
    Abstract: The Napoleonic Wars had dramatic consequences for Spain's economy. The Peninsular War had higher demographic impact than any other military conflict, including civil wars, in the modern era. Farmers suffered confiscation of their crops and destruction of their main capital asset, livestock. The shrinking demand, the disruption of international and domestic trade, and the shortage of inputs hampered industry and services. The loss of the American colonies, a by-product of the French invasion, seriously harmed absolutism. In the long run, however, the Napoleonic Wars triggered the dismantling of Ancien Régime institutions and interest groups. Freed from their constraints, the country started a long and painful transition towards the liberal society. The Napoleonic Wars may be deemed, then, a watershed in Spanish history.
    Keywords: Growth; Institutional Change; Spain; Peninsular War; Napoleonic Wars
    JEL: N43 N13 F54 E02
    Date: 2018–04–24
  7. By: Krueger, Dirk; Ludwig, Alexander
    Abstract: We characterize the optimal linear tax on capital in an Overlapping Generations model with two period lived households facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium feedback of private precautionary saving. For logarithmic utility our full analytical solution of the Ramsey problem shows that the optimal aggregate saving rate is independent of income risk. The optimal time-invariant tax on capital is increasing in income risk. Its sign depends on the extent of risk and on the Pareto weight of future generations. If the Ramsey tax rate that maximizes steady state utility is positive, then implementing this tax rate permanently generates a Pareto-improving transition even if the initial equilibrium is dynamically efficient. We generalize our results to Epstein-Zin-Weil utility and show that the optimal steady state saving rate is increasing in income risk if and only if the intertemporal elasticity of substitution is smaller than 1.
    Keywords: Idiosyncratic Risk,Taxation of Capital,Overlapping Generations,Precautionary Saving,Pecuniary Externality
    JEL: H21 H31 E21
    Date: 2018
  8. By: Ahmad, Mahyudin
    Abstract: This paper seeks to deepen our understanding of the globalization-growth nexus as it extends the investigation to using a spatial econometric approach, hitherto has been rarely used in the globalization literature. The objective of the paper is to uncover not only the significant growth-effects of globalization, but also the possible spillover effects of globalization onto neighbouring countries. Using a panel dataset of 83 countries and 30-year period and via a spatial autoregressive panel data method, this paper estimates a standard growth model augmented with a parameter to capture the countries’ spatial dependence, whilst controlling for globalization indices. The findings indicate a positive effect of economic globalization and the effect is dependent upon the political settings in the countries under study. The spillover effects of globalization across neighbouring countries are shown, both in geographical and institutional spheres. The paper concludes with some policy recommendations.
    Keywords: globalization, economic growth, institutional quality, spatial autooregressive model
    JEL: C31 O43
    Date: 2018–03
  9. By: Elie Gray; André Grimaud; David Le Bris
    Abstract: To explain the process of development historically documented, we consider a model with three economic sectors (agriculture, manufacturing and services) characterized by different productivity gains and by saturation levels in the demands of agricultural and manufactured goods. Our parsimonious model captures within a single framework the process of development which is characterized by the structural changes in the workforce across sectors, variable growth rates (an initial “Malthusian regime” exhibiting slow growth, a fast growth regime after a takeoff, and a gradual slow down leading to a possible new stagnation) and the relative evolutions of prices across sectors. Reasonable calibration generates results quantitatively close to the observed empirical facts.
    Keywords: growth mode, structural change, unified growth, economic development, saturation of demands
    JEL: O10 O40 N10
    Date: 2018
  10. By: Leonid V. Azarnert
    Abstract: This paper studies the effect of refugee resettlement on human capital accumulation. The analysis is performed in a growth model with endogenous fertility. I show how refugee resettlement from a more advanced and wealthier economy to a less advanced and less wealthy economy combined with income transfers is Pareto-improving for indigenous populations in both countries. I also derive conditions for the proposed resettlement policy to stimulate human capital accumulation and hence economic growth in both economies.
    Keywords: refugee resettlement, fertility, human capital, growth
    JEL: D30 F22 J10 O10
    Date: 2018
  11. By: Giovanni Dosi (Laboratory of Economics and Management); Andrea Roventini (Laboratory of Economics and Management (LEM)); Emmanuele Russo (Scuola Superiore Sant'Anna)
    Abstract: In this paper we present a multi-country, multi-industry agent-based model investigating the different growth patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National growth trajectories are driven by firms’ accumulation of technological knowledge, which in turn also leads to emergent specialization patterns in different industries. Interactions among economies occur via trade flows, stemming from the competition of firms in international markets. Simulation results show the emergence of persistent income divergence among countries leading to polarization and club formation. Moreover, each country experiences a structural transformation of its productive structure during the development process. Such dynamics results from firm-level virtuous (or vicious) cycles between knowledge accumulation, trade performances, and growth dynamics. The model accounts for a rich ensemble of empirical regularities at macro, meso and micro levels of aggregation.
    Keywords: Endogenous growth; Structural change ; Technology gaps; Global divergence; Absolute advantages; Agent based models
    JEL: F41 F43 O4 O3
    Date: 2018–01

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