nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒05‒14
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Diversity and Conflict By Cemal Eren Arbatli; Quamrul H. Ashraf; Oded Galor; Marc P. B. Klemp
  2. Somatic distance, cultural affinities, trust and trade By Melitz, Jacques; Toubal, Farid
  3. ‘Getting to Denmark’: the Role of Elites for Development By Jensen, Peter Sandholt; Lampe, Markus; Sharp, Paul
  4. Colonial Origins and Comparative Development: Institutions Matter By Chakraborty, Adrij
  5. Heterogeneous human capital, inequality and growth: the role of patience and skills By Borissov, Kirill; Bosi, Stefano; Ha-Huy, Thai; Modesto, Leonor
  6. The Impact of Climate Conditions on Economic Production. Evidence from a Global Panel of Regions By Kalkuhl, Matthias; Wenz, Leonie
  7. Agriocliometrics and Agricultural Change in the Nineteenth and Twentieth Centuries By Vicente Pinilla
  8. Social Capital, Government Expenditures and Growth By Giacomo A.M. Ponzetto; Ugo Troiano
  9. Analysing the Sources of Growth in an Emerging Market Economy: The Thailand Experience By Ho, Sin-Yu
  10. Unemployment, Income Growth and Social Security By Watanabe, Minoru; Miyake, Yusuke; Yasuoka, Masaya
  11. Innovation, Finance, and Economic Growth : an agent-based model By Giorgio Fagiolo; Daniele Giachini; Andrea Roventini
  12. Why Has Economic Growth Slowed When Innovation Appears to be Accelerating? By Robert J. Gordon
  13. The Patent-issuing Rules and Economic Growth: Are We in a "Wrong" Patent Regime? By Tetsugen Haruyama; Kaz Miyagiwa

  1. By: Cemal Eren Arbatli; Quamrul H. Ashraf; Oded Galor; Marc P. B. Klemp
    Abstract: This research advances the hypothesis and establishes empirically that interpersonal population diversity has contributed significantly to the emergence, prevalence, recurrence, and severity of intrasocietal conflicts. Exploiting an exogenous source of variations in population diversity across nations and ethnic groups, it demonstrates that population diversity, as determined predominantly during the exodus of humans from Africa tens of thousands of years ago, has contributed significantly to the risk and intensity of historical and contemporary internal conflicts, accounting for the confounding effects of geographical, institutional, and cultural characteristics, as well as for the level of economic development. These findings arguably reflect the adverse effect of population diversity on interpersonal trust, its contribution to divergence in preferences for public goods and redistributive policies, and its impact on the degree of fractionalization and polarization across ethnic, linguistic, and religious groups.
    Keywords: social conflict, population diversity, ethnic fractionalization, ethnic polarization, interpersonal trust, political preferences
    JEL: D74 N30 N40 O11 O43 Z13
    Date: 2018
  2. By: Melitz, Jacques; Toubal, Farid
    Abstract: Somatic distance, or differences in physical appearance, proves to be extremely important in the gravity model of bilateral trade in conformity with results in other areas of economics and outside of it in the social sciences. This is also true quite independently of survey evidence about bilateral trust. These findings are obtained in a sample of the 15 members of the European Economic Association in 1996. Robustness tests also show that somatic distance has a more reliable influence on bilateral trade than the other cultural variables. The article finally discusses the interpretation and the breadth of application of these results.
    Keywords: Bilateral Trade; Cultural interactions; Language; Somatic distance; Trust
    JEL: F10 F40 Z10
    Date: 2018–04
  3. By: Jensen, Peter Sandholt (University of Southern Denmark); Lampe, Markus (Vienna University of Economics and Business); Sharp, Paul (University of Southern Denmark, CAGE, CEPRAuthor-Name: Skovsgaard, Christian Volmar; University of Southern Denmark)
    Abstract: We explore the role of elites for development and in particular for the spread of cooperative creameries in Denmark in the 1880s, which was a major factor behind that country’s rapid economic catch-up. We demonstrate empirically that the location of early proto-modern dairies, so-called hollænderier, introduced onto traditional landed estates as part of the Holstein System of agriculture by landowning elites from the Duchies of Schleswig and Holstein in the eighteenth century, can explain the location of cooperative creameries in 1890, more than a century later, after controlling for other relevant determinants. We interpret this as evidence that areas close to estates which adopted the Holstein System witnessed a gradual spread of modern ideas from the estates to the peasantry. Moreover, we identify a causal relationship by utilizing the nature of the spread of the Holstein System around Denmark, and the distance to the first estate to introduce it, Sofiendal. These results are supported by evidence from a wealth of contemporary sources and are robust to a variety of alternative specifications.
    Keywords: Institutions, technology, cooperatives, dairying JEL Classification: N53, O13, Q13
    Date: 2018
  4. By: Chakraborty, Adrij
    Abstract: A large literature is present on how colonial origins through the channels of Institutions and human capital explain the income variation between countries. In most cases, it is argued that colonial European settlement outside of Europe has shaped the type of institutions present today that explain the gap between income levels of countries. Others criticize this claim on the basis that firstly, geography plays a prominent role in income variation and secondly, the studies in favor of the primacy of the role of institutions suffer from measurement error and bias. In this study, we analyze the role colonial origins and geography play in comparative income levels of countries today. In this study, we present a theoretical analysis for what determines growth in the long run and how colonial origins come into play and then make an empirical study using OLS and IV techniques, while utilizing recent data and different proxies, into the claims that colonial origins and/or geography play the prominent role. We also investigate whether the institutions primacy studies suffer from measurement error. Our findings point out that while geography may play a small role, majority of the income variation is associated with institutions and colonial origins.
    Keywords: Colonial Origins, Comparative Development, Institutions, Economic Growth
    JEL: I12 N10 O1 O11 O4 O57 P16 P51
    Date: 2017–03
  5. By: Borissov, Kirill; Bosi, Stefano; Ha-Huy, Thai; Modesto, Leonor
    Abstract: We extend the Lucas' 1988 model introducing two classes of agents with heterogeneous skills, discount factors and initial human capital endowments. We consider two regimes according to the planner's political constraints. In the first regime, that we call meritocracy, the planner faces individual constraints. In the second regime the planner faces an aggregate constraint, redistributing. We find that heterogeneity matters, particularly with redistribution. In the meritocracy regime, the optimal solution coincides with the BGP found by Lucas (1988) for the representative agent's case. In contrast, in the redistribution case, the solution for time devoted to capital accumulation is never interior for both agents. Either the less talented agents do not accumulate human capital or the more skilled agents do not work. Moreover, social welfare under the redistribution regime is always higher than under meritocracy and it is optimal to exploit existing differences. Finally, we find that inequality in human capital distribution increases in time and that, in the long run, inequality always promotes growth.
    Keywords: human capital, heterogenous patience and skills, inequality and growth.
    JEL: E24 O4 O41
    Date: 2018–04
  6. By: Kalkuhl, Matthias; Wenz, Leonie
    Abstract: We estimate the impacts of climate on economic growth using Gross Regional Product (GRP) for more than 1,500 regions in 77 countries. In temperate and tropical climates, annual temperature shocks reduce GRP whereas they increase GRP in cold climates. With respect to long-term climate conditions, one degree of temperature increase reduces output by 2-3%. The effect of annual or long-term precipitation is found to be less important and less robust among specifications. For projected global warming of 4°C until 2100, we find that regions lose 9\% of economic output on average and more than 20% of output in tropical regions.
    Keywords: climate change,climate damages,climate impacts,growth regression
    JEL: E23 O11 Q54 Q56
    Date: 2018
  7. By: Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragon -IA2- (Universidad de Zaragoza-CITA), Spain)
    Abstract: Before the industrial revolution, agriculture was the most important economic activity of traditional societies. The spread of industrialisation processes, first throughout a large part of the western world and later across many more countries, gave rise to an abundance of literature on the role of agriculture in these processes. The initial perspectives offered by economic history, particularly for the British case, and the approaches of development economics specialists, largely based on previous studies by economic historians, became subject to reconsideration when numerous studies emerged that, from a cliometric point of view, sought to evaluate the changes experienced by agriculture and their contribution to economic growth. In this context, the objective of this study is to use these contributions to analyse the profound transformations that have occurred in agriculture around the world over the last two centuries.
    Keywords: Economic History, Cliometrics, Agricliometrics, Agricultural Production, Agricultural Productivity, Technological Change, Agricultural Trade, Globalisation, Agricultural Policies, Agrarian Institutions
    JEL: N01 N50 Q10
    Date: 2018–05
  8. By: Giacomo A.M. Ponzetto; Ugo Troiano
    Abstract: This paper shows that social capital increases economic growth by raising government investment in human capital. We present a model of stochastic endogenous growth with imperfect political agency. Only some people correctly anticipate the future returns to current spending on public education. Greater social diffusion of information makes this knowledge more widespread among voters. As a result, we find it alleviates myopic political incentives to underinvest in human capital, and it helps the selection of politicians that ensure high productivity in public education. Through this mechanism, we show that social capital raises the equilibrium growth rate of output and reduces its volatility. We provide evidence consistent with the predictions of our model. Individuals with higher social capital are more informed about their government. Countries with higher social capital spend a higher share of output on public education.
    JEL: D72 D83 H4 H52 I22 I25 O43 Z13
    Date: 2018–04
  9. By: Ho, Sin-Yu
    Abstract: This paper investigates the sources of economic growth in Thailand during the period 1975 to 2014. The results show that, in the long run, human capital and inflation exert a positive and significant impact on output, while foreign direct investment and foreign aid have negative and significant impact on output. The results also show that, in the short run, physical capital, labour and human capital have a positive and significant impact on growth, while the initial level of human capital, government expenditure, the initial level of inflation, foreign direct investment and foreign aid have a negative and significant impact on growth. Based on these findings, we offer some policy implications.
    Keywords: sources of growth; Thailand; ARDL bounds testing
    JEL: C22 O47 O53
    Date: 2018–04
  10. By: Watanabe, Minoru; Miyake, Yusuke; Yasuoka, Masaya
    Abstract: Considering the sustainability of social security in an aging society with fewer children, income growth and population growth are important factors. With a decrease in income growth or population growth, social security transfers such as pension benefits cannot be provided. The intergenerational social security benefit is being reassessed in some OECD countries. In Japan, social security benefits for younger people are small because of an aging society. This paper presents description of an unemployment model with a minimum wage and social security benefits and presents examination of how unemployment benefits for the younger people affect income growth, fertility, and welfare. The results described herein demonstrate that unemployment benefits raise the capital stock and income level per capita. Therefore, this benefit should be provided to maintain the tax revenue for social security. Moreover, this benefit can increase social welfare.
    Keywords: Minimum wage, Social security, Unemployment
    JEL: E24 H55 J64
    Date: 2018–04–12
  11. By: Giorgio Fagiolo (Laboratory of Economics and Management (LEM)); Daniele Giachini (Scuola Superiore Sant'Anna); Andrea Roventini (Laboratory of Economics and Management (LEM))
    Abstract: This paper extends the endogenous-growth agent-based model in Fagiolo and Dosi (2003) to study the financegrowth nexus. We explore industries where firms produce a homogeneous good using existing technologies, perform R&D activities to introduce new techniques, and imitate the most productive practices. Unlike the original model, we assume that both exploration and imitation require resources provided by banks, which pool agent savings and finance new projects via loans. We find that banking activity has a positive impact on growth. However, excessive financialization can hamper growth. In- deed, we find a significant and robust inverted-U shaped relation between financial depth and growth. Overall, our results stress the fundamental (and still poorly understood) role played by innovation in the finance-growth nexu
    Keywords: Agent based model; Innovation; Exploration vs exploitation; Endogenous Growth; Banking sector; Finance Growth Nexus
    JEL: C63 G21 O30 O31
    Date: 2017–11
  12. By: Robert J. Gordon
    Abstract: Measured between quarters with identical unemployment rates, U. S. economic growth slowed by more than half from 3.2 percent per year during 1970-2006 to only 1.4 percent during 2006-16, and only half of this GDP growth slowdown is accounted for diminished productivity growth. The paper starts from the proposition that GDP growth matters, not just productivity growth, because slower GDP growth provides fewer resources to address the nation’s problems, including faltering education, aging infrastructure, and the looming shortfall in funding for Social Security and Medicare, and it also implies lower net investment and a reduced rate at which new capital can embody the latest technology. The paper documents the contribution to slower GDP growth of the separate components of demography -- fertility, mortality, life expectancy, and immigration. Particular emphasis is placed on the interaction between rising inequality and the slower secular rise of life expectancy in the U.S. compared to other developed countries, both in the form of a large gap in life expectancy between rich and poor, and the stagnation of life expectancy for the lowest income quintile. Further contributions to slowing growth are made by a decline in the population share of both legal and illegal immigration and a turnaround from rising to declining labor force participation. Rising inequality creates a gap between the growth of average real per-capita income relative to that of median real income, and alternative measures of the evolution of this gap are compared and assessed. Causes of declining productivity growth begin with the slowdown in the rate of increase of educational attainment resulting from the interplay of demand and supply factors, including the flattening of the college wage premium and the rising relative price of college education. Why did productivity growth decline after 2006 despite an increase in the rate at which new U.S. patents were issued in 2006-16 compared to earlier decades? Part of the slowdown is attributed to the maturity of the IT revolution, which also helps to explain the trajectory of the college wage premium. Aspects of the productivity growth slowdown include the declining productivity of research workers, diminishing returns to drug innovation, and the evolutionary rather than revolutionary impact of robots and artificial intelligence, which are replacing workers slowly and only in a minority of industrial sectors throughout the economy. Also considered are alternative explanations of slower productivity growth, including low investment and mismeasurement.
    JEL: D24 E24
    Date: 2018–04
  13. By: Tetsugen Haruyama (The Graduate School of Economics, Kobe University); Kaz Miyagiwa (Department of Economics, Florida International University)
    Abstract: Probably, yes.
    Date: 2018–05

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