nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒06‒11
fourteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Ancestral characteristics of modern populations By Giuliano, Paola; Nunn, Nathan
  2. Somatic Distance, Cultural Affinities, Trust and Trade By Jacques Melitz; Farid Toubal
  3. Well-being Inequality in the Long Run By Prados de la Escosura, Leandro
  4. Endogenous Growth and Entropy By Tiago Neves Sequeira; Pedro Mazeda Gil; Óscar Afonso
  5. Should We Fear the Robot Revolution? (The Correct Answer is Yes) By Andrew Berg; Edward F Buffie; Luis-Felipe Zanna
  6. Sharp Instrument: A Stab at Identifying the Causes of Economic Growth By Reda Cherif; Fuad Hasanov; Lichen Wang
  7. R&D financing and growth By Luca, Spinesi; Mario, Tirelli
  8. Long-run Sustainability in the Green Solow Model By Guilló, María Dolores; Magalhaes, Manuela
  9. Energy Consumption and Economic Growth Modelling in SADC Countries: An Application of the VAR Granger Causality By Sunde, Tafirenyika
  10. Revisiting the Environmental Kuznets Curve and the Role of Energy Consumption: The Case of Namibia By Sunde, Tafirenyika
  11. The interaction of Energy Consumption and Economic Growth in South Africa: Assessment from the Bounds Testing Approach. By Sunde, Tafirenyika
  12. Did the Black Death Cause Economic Development by "Inventing" Fertility Restriction? By Jeremy Edwards; Sheilagh Ogilvie
  13. An AB-SFC Model of Induced Technical Change along Classical and Keynesian Lines By Fanti, Lucrezia
  14. Government education expenditures and economic growth: a meta-analysis By Churchill, Sefa Awaworyi; Ugur, Mehmet; Yew, Siew Ling

  1. By: Giuliano, Paola; Nunn, Nathan
    Abstract: We construct a database, with global coverage, that provides measures of the cultural and environmental characteristics of the pre-industrial ancestors of the world's current populations. In this paper, we describe the construction of the database, including the underlying data, the procedure to produce the estimates, and the structure of the final data. We then provide illustrations of some of the variation in the data and provide an illustration of how the data can be used.
    Keywords: cultural traits; Historical development; Persistence; Political Institutions
    JEL: N00 Z10 Z13
    Date: 2018–05
  2. By: Jacques Melitz; Farid Toubal
    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: somatic distance, cultural interactions, trust, language, bilateral trade
    JEL: F10 F40 Z10
    Date: 2018
  3. By: Prados de la Escosura, Leandro
    Abstract: This paper provides a long-run view of well-being inequality at world scale based on a new historical dataset. Trends in social dimensions alter the view on inequality derived from per capita GDP. While in terms of income, inequality increased until the third quarter of the twentieth century; in terms of well-being, inequality fell steadily since World War I. The spread of mass primary education and the health transitions were its main drivers. The gap between the West and the Rest explains only partially the evolution of well-being inequality, as the dispersion within the developing regions has increasingly determined its evolution.
    Keywords: education; Health Transition; inequality; Life Expectancy; per capita GDP; Well-being
    JEL: I00 N30 O15 O50
    Date: 2018–05
  4. By: Tiago Neves Sequeira (Universidade da Beira Interior and CEFAGE-UBI); Pedro Mazeda Gil (cef.up, FEP, Universidade do Porto); Óscar Afonso (cef.up and FEP, Universidade do Porto, and CEFAGE-UBI)
    Abstract: This paper offers novel insights regarding the role of complexity in both the transitional and the long-run dynamics of the economy. We devise an endogenous growth model using the concept of entropy as a state-dependent complexity effect. This allows us to gradually diminish scale effects as the economy develops along the transitional dynamics, which conciliates evidence on the existence of scale effects in history with evidence of no or reduced scale effects in today’s economies. We show that empirical evidence supports entropy as a “first principle” operator of the complexity effect. The model features endogenous growth, with null or small (positive or negative) scale effects, or stagnation, in the long run. These different long-run possibilities have also policy implications. Then, we show that the model can replicate well the take-off after the industrial revolution and the productivity slowdown in the second half of the XXth century. Future scenarios based on in-sample calibration are discussed, and may help to explain (part of) the growth crises affecting the current generation.
    Keywords: endogenous economic growth; complexity effects; entropy.
    JEL: O10 O30 O40 E22
    Date: 2018–04
  5. By: Andrew Berg; Edward F Buffie; Luis-Felipe Zanna
    Abstract: We may be on the cusp of a “second industrial revolution” based on advances in artificial intelligence and robotics. We analyze the implications for inequality and output, using a model with two assumptions: “robot” capital is distinct from traditional capital in its degree of substitutability with human labor; and only capitalists and skilled workers save. We analyze a range of variants that reflect widely different views of how automation may transform the labor market. Our main results are surprisingly robust: automation is good for growth and bad for equality; in the benchmark model real wages fall in the short run and eventually rise, but “eventually” can easily take generations.
    Date: 2018–05–21
  6. By: Reda Cherif; Fuad Hasanov; Lichen Wang
    Abstract: We shed new light on the determinants of growth by tackling the blunt and weak instrument problems in the empirical growth literature. As an instrument for each endogenous variable, we propose average values of the same variable in neighboring countries. This method has the advantage of producing variable-specific and time-varying—namely, “sharp”—and strong instruments. We find that export sophistication is the only robust determinant of growth among standard growth determinants such as human capital, trade, financial development, and institutions. Our results suggest that other growth determinants may be important to the extent they help improve export sophistication.
    Date: 2018–05–21
  7. By: Luca, Spinesi; Mario, Tirelli
    Abstract: R&D investment are an important engine of growth and development. Yet economists have often claimed underinvestment, also due to the asymmetric information between inside investors and outside investors and financiers, and the consequent capital and financial market imperfections. Some recent empirical evidence robustly supports these claims. Motivated by this evidence, we study the effects of asymmetric information and financial frictions on R&D investment within a dynamic GE economy of Shumpeterian tradition. The model and equilibrium concept we propose is rich enough to represent investment and innovation decisions, financial decisions and decisions regarding technology adoption/diffusion through patent licensing. Qualitative predictions indicate that the financial policy of the firm matters in explaining both entrepreneurial production and innovation decisions. Young R&D-intensive firms might rely more heavily on internal sources and equity than on debt financing, relatively to what would otherwise be observed in absence of frictions. These findings contribute to explain the type of financial hierarchy recently highlighted in the empirical studies.
    Keywords: Innovation, R&D, Shumpeterian growth, firm financial structure, asymmetric information, financial markets, general equilibrium.
    JEL: D5 D53 D92 O31 O33 O34 O4
    Date: 2018–04–30
  8. By: Guilló, María Dolores (University of Alicante, D. Quantitative Methods and Economic Theory); Magalhaes, Manuela (University of Alicante, D. Quantitative Methods and Economic Theory)
    Abstract: The aim is to advance in the analytical framework of green growth and to shed light on the concept of long run sustainability. We extend the Green Solow model by including a land-capital input and land degradation as a by-product of economic activity. In this framework, the effectiveness of technological progress in abatement depends on the degree of environmental stress, measured as the excess of output growth over land-capital growth. We build land-capital data at the country level using the Enhanced Vegetation Index and calibrate the model for the USA economy. In addition, we estimate the growth equation of per capita CO2 emissions over the period 2000-2011. We find convergence at the global level, statistical significance of the environmental stress parameter and a negative effect of land-capital investment on the growth rate of emissions, implying that in the long run the positive environmental effect is stronger than the production effect.
    Keywords: Green-Solow; Enhanced Vegetation Index; convergence; CO2 emissions
    JEL: O10 O13 O40 O44 P16
    Date: 2018–06–05
  9. By: Sunde, Tafirenyika
    Abstract: The study investigated the relationship between energy consumption and economic growth in 10 SADC countries using the VAR model over the period 1971 to 2015. The variables used were first converted to growth rates before they were used in the model estimated. The results indicate unidirectional causality running from real economic growth to energy consumption in Angola, Democratic Republic of Congo, Mauritius, Namibia, bidirectional causality between energy consumption and economic growth in Botswana and Mauritius and no causality in Mozambique, South Africa, Zambia and Zimbabwe. In countries where real economic growth Granger causes energy consumption the conservation hypothesis is confirmed. In countries where no causality was found the neutrality hypothesis is confirmed which implies that energy conservation will not lead to decreased economic growth and energy consumption will not be stimulated by economic growth. The feedback hypothesis confirmed in Botswana and Mauritius implies that an increase in the economic output will increase the level of energy consumption while an energy conservation policy will adversely affect economic output.
    Keywords: Economic growth; energy consumption; VAR model; Granger causality; SADC countries.
    JEL: Q43
    Date: 2017–08–26
  10. By: Sunde, Tafirenyika
    Abstract: The study investigated the dynamic relationship between CO2 emissions, economic growth, and energy consumption for the period 1991:q1-2016:q4 in Namibia. The study applied the ARDL and Granger causality analysis to investigate the long run and causal relationships among these variables, respectively. The study confirmed a long run relationship between CO2 emissions, economic growth, and energy consumption. The results showed that the Environmental Kuznets Curve (EKC) is found in both long and short runs in Namibia and that all the variables Granger cause each other. These results imply that economic growth can be a remedy for environmental degradation which means that the exploitation of natural resources to realize economic growth can be accepted until the turning point of the EKC curve is reached. The study recommends that actions to slow down the release of CO2 emissions and the raising of awareness about environmental concerns should wait until the economy reaches high-income levels.
    Keywords: Environmental Kuznets Curve; CO2 emissions; economic growth; energy consumption; ARDL-ECM; Granger causality; Namibia.
    JEL: Q43 Q48
    Date: 2018–01–10
  11. By: Sunde, Tafirenyika
    Abstract: Researchers concur that energy plays a very significant role in the economic growth and development of any country and that increasing access to modernized systems of energy is critical to unlocking enhanced economic and social development in any country. In the light of this, the current article has empirically examined the causal interactions between energy consumption and economic growth in South Africa for the period 1970 to 2015 using the ARDL-bounds testing method. The results show that all the variables were found to be integrated of order one. The empirical results obtained fully support a positive long-run cointegrating relationship between real economic growth and energy consumption in South Africa. The article used trade openness and financial development as control variables in the model. The research found that although there is unidirectional causality running from energy consumption to economic growth in the short-run, there is long-run bidirectional causality between the two variables as indicated by the coefficients of the error correction terms which were found to be negative and significant as predicted by theory. This means that reducing energy consumption adversely affect real economic growth in both the short- and the long-run; thus, South Africa should adopt a more vigorous energy policy.
    Keywords: Energy consumption; economic growth; financial development; trade openness; ARDL; error‐correction model; South Africa
    JEL: Q43
    Date: 2017–12–14
  12. By: Jeremy Edwards; Sheilagh Ogilvie
    Abstract: Voigtländer and Voth argue that the Black Death shifted England towards pastoral agriculture, increasing wages for unmarried women, thereby delaying female marriage, lowering fertility, and unleashing economic growth. We show that this argument does not hold. Its crucial assumption is inconsistent with the evidence: women wanting to do pastoral work after the Black Death did not have to remain unmarried, so improved pastoral opportunities did not necessitate later marriage. There is no consensus that late female marriage emerged after the Black Death. Furthermore, the relationship between pastoralism and female marriage age in England provides no support for this argument.
    Keywords: European marriage pattern, black death, land-labour ratio, arable and pastoral agriculture
    JEL: E02 J12 J13 N13 N33
    Date: 2018
  13. By: Fanti, Lucrezia
    Abstract: This paper introduces the classical idea about the so-called directed and induced technical change (ITC) within a Keynesian demand-side and evolutionary endogenous growth model in order to analyze the interplay among technical change, long-run economic growth and functional income distribution. An ITC process is analyzed within an Agent-Based Stock-Flow Consistent (AB-SFC) model, wherein credit-constrained heterogeneous firms choose both the intensity and the direction of the innovation towards a labor- or capital-saving choice of technique. In the long-run, the model reproduces the so-called Kaldor stylized facts (i.e. with a purely labor-saving technical change), however during the transitional phase the model shows a labor-saving/capital-using innovation pattern, as the aggregate output-capital ratio decreases until it stabilizes in the long-run, as well as declining labor share for long time periods and we can ascribe these evidences mainly to the directed technical change process. In order to stress the effective role of the innovation bias on the model dynamics, we compare the baseline scenario with a counterfactual scenario wherein a neutral technical progress is at work.
    Keywords: Agent-Based Macroeconomics; Stock-Flow Consistent Models; Induced Technical Change; Directed Innovation; Choice of Techniques; Labor Share; Growth and Distribution.
    JEL: E24 E25 O33 O41
    Date: 2018–03–10
  14. By: Churchill, Sefa Awaworyi; Ugur, Mehmet; Yew, Siew Ling
    Abstract: Using a sample of 237 estimates drawn from 29 primary studies, we conduct a hierarchical meta-regression analysis that examines the association between economic growth and government expenditure on education. We find that the effect of government education expenditure on growth is positive for developed countries. However, when the evidence pertains to less developed countries (LDCs), we find a statistically insignificant association. We also examine the heterogeneity in empirical results and found that factors such as econometric specifications, publication characteristics as well as data characteristics explain the heterogeneity in the literature. We find no evidence of publication selectivity.
    Keywords: Economic growth; Government education expenditure; Human capital
    Date: 2017–05–25

This nep-gro issue is ©2018 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.