nep-gro New Economics Papers
on Economic Growth
Issue of 2018‒06‒18
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. The Cultural Divide By Desmet, Klaus; Wacziarg, Romain
  2. Maize and Precolonial Africa By Jevan Cherniwchan; Juan Moreno-Cruz
  3. Pension Policies in a Model with Endogenous Fertility By Cipriani, Giam Pietro; Pascucci, Francesco
  4. A Note on Growth, Energy Intensity and the Energy Mix: A Dynamic Panel Data Analysis By Antonia Díaz; Gustavo A. Marrero; Luis Puch; Jesús Rodríguez-López
  5. The Optimum Quantity of Capital and Debt By Acikgöz, Ömer; Hagedorn, Marcus; Holter, Hans; Wang, Yikai
  6. Is Inequality Increasing in r-g? The Dynamics of Capital’s Income Share in the UK, 1210-2013 By MADSEN, Jakob B
  7. Inverse J effect of economic growth on fertility: a model of gender wages and maternal time substitution By Creina Day
  8. Patents in the Long Run: Theory, History and Statistics By Claude Diebolt; Karine Pellier
  9. Will wealth become more concentrated in Europe? Evidence from a calibrated neo-Kaleckian model By Stefan Ederer; Miriam Rehm
  10. Life After Default: Private vs. Official Sovereign Debt Restructurings By Silvia Marchesi; Tania Masi

  1. By: Desmet, Klaus; Wacziarg, Romain
    Abstract: This paper conducts a systematic quantitative study of cultural convergence and divergence in the United States over time. Using the General Social Survey (1972-2016), we assess whether cultural values have grown more or less heterogeneous, both overall and between groups. Groups are defined according to 11 identity cleavages such as gender, religion, ethnic origin, family income quintiles, geographic region, education levels, etc. We find some evidence of greater overall heterogeneity after 1993 when averaging over all available values, yet on many issues heterogeneity changes little. The level of between-group heterogeneity is extremely small: the United States is very pluralistic in terms of cultural attitudes and values, but this diversity is not primarily the result of cultural divides between groups. On average across cleavages and values, we find evidence of falling between-group heterogeneity from 1972 to the late 1990s, and growing divides thereafter. We interpret these findings in light of a model of cultural change where intergenerational transmission and forces of social influence determine the distribution of cultural traits in society.
    Keywords: between-group heterogeneity; cultural convergence; cultural divide; Cultural Evolution; cultural heterogeneity; General Social Survey; United States
    JEL: D70 Z1
    Date: 2018–05
  2. By: Jevan Cherniwchan; Juan Moreno-Cruz
    Abstract: Columbus’s arrival in the New World triggered an unprecedented movement of people and crops across the Atlantic Ocean. We study an overlooked part of this Columbian Exchange: the effects of New World crops in Africa. Specifically, we test the hypothesis that the introduction of maize increased population density and Trans-Atlantic slave exports in precolonial Africa. We find robust empirical support for these predictions. We also find little evidence to suggest maize increased economic growth or reduced conflict. Our results suggest that rather than stimulating development, the introduction of maize simply increased the supply of slaves during the Trans-Atlantic slave trade.
    Keywords: Africa, Columbian exchange, maize, slave trades
    JEL: N57 O13 Q10
    Date: 2018
  3. By: Cipriani, Giam Pietro (University of Verona); Pascucci, Francesco (University of Verona)
    Abstract: We set up an overlapping generations model with endogenous fertility to study pensions policies in an ageing economy. We show that an increasing life expectancy may not be detrimental for the economy or the pension system itself. On the other hand, conventional policy measures, such as increasing the retirement age or changing the social security contribution rate could have undesired general equilibrium effects. In particular, both policies decrease capital per worker and might have negative effects on the fertility rate, thus exacerbating population ageing.
    Keywords: overlapping generations, pension policies, endogenous fertility, ageing
    JEL: H55 J13 J18 J26
    Date: 2018–04
  4. By: Antonia Díaz (Universidad Carlos III de Madrid); Gustavo A. Marrero (Universidad de La Laguna); Luis Puch (Universidad Complutense de Madrid); Jesús Rodríguez-López (U. Pablo de Olavide)
    Abstract: This paper explores how changes in energy intensity and the switch to renewables can boost economic growth. In doing so, we implement a dynamic panel data approach on a sample of 134 countries over the period 1960 to 2010. We incorporate a set of control variables, related to human and physical capital, socio-economic conditions, and policies which are widely used in the associated literature. According to our results, and given the current state of technology, improving energy intensity is an approach that could reconcile growth and the environment at the worldwide level. Moving to conventional renewables (biomass and hydro) may reduce CO2 emissions, consistent with the related literature, although we do not find evidence that supports a growth enhancing effect. However, moving to frontier renewables (wind, solar, wave or geothermic) does reconcile the reduction of CO2 emissions with economic growth. Our results are robust to the specification of the dynamic panel with respect to three alternative methods, namely, the pooled OLS regression, the regression under fixed effects, and the GMM estimation.
    Keywords: Economic growth, energy intensity, renewable energy, dynamic panel data models.
    JEL: C23 C33 O5 Q2 Q3 Q41 Q43 Q42 Q48
    Date: 2018–06
  5. By: Acikgöz, Ömer; Hagedorn, Marcus; Holter, Hans; Wang, Yikai
    Abstract: In this paper we solve the dynamic optimal Ramsey taxation problem in a model with incomplete markets, where the government commits itself ex-ante to a time path of labor taxes, capital taxes and debt to maximize the discounted sum of agents' utility starting from today. Whereas the literature has bee limited mainly to studying policies that maximize steady-state welfare only, we instead characterize the optimal policy along the full transition path. We show theoretically that in the long run the capital stock satisfies the modified golden rule. More importantly, we prove that in contrast to complete markets economies, in incomplete markets economies the long run steady state resulting from an infinite sequence of optimal policy choices is independent of initial conditions. This result is not only of theoretical interest but moreover, enables us to compute the long-run optimum independently from the transition path such that a quantitative analysis becomes tractable Quantitatively we find, robustly across various calibrations, that in the long run the government debt-to-GDP ratio is high, capital is taxed at a low rate and labor income at a high rate when compared to current U.S. values. Along the optimal transition to the steady state, labor taxes initially are lowered, financed through issuing more debt and taxing capital income heavily, before they are eventually increased to their steady-state level.
    Keywords: Capital taxation; Dynamically Optimal Taxation; incomplete markets; Optimal Government Debt
    JEL: E62 H20 H60
    Date: 2018–05
  6. By: MADSEN, Jakob B
    Abstract: This paper provides the first very long term empirical examination of Piketty’s (2014) controversial hypothesis that inequality is increasing in r – g, (assets - real income). Using unique annual data on asset returns for a balanced portfolio and several other variables for the UK over the period 1210-2013, the study examines whether the dynamics in capital’s income share, SW, are governed by (r–g). The analysis confirms that r and g are robust and significant determinants of factor shares and that they have been the major forces behind the large inequality waves over the past eight centuries.
    Keywords: Inequality and the (r-g)-gap, dynamics of inequality, inequality in the UK, 1210-2013
    JEL: E1 E2 O4 N1 N30 P1
    Date: 2018–06
  7. By: Creina Day
    Abstract: This paper presents a model where economic growth, via growth in female wages relative to male wages, encourages households to raise paid female labor supply and have more children by substituting child care for maternal time. A threshold logarithm per capita output, above which fertility decline reverses, depends on subsidized child care, maternity pay, and the value placed on children and maternal time spent rearing children. The predictions explain recent evidence and identify cross country differences in gender wages, family policy and willingness to substitute maternal time in child rearing as important factors in an inverse J-shaped effect of economic growth on fertility. The analysis is robust to the introduction of education and cost sharing among children in child rearing. Economies of scale in child rearing reduces the threshold logarithm of per capita output. Demand for child quality continues to rise with wages despite fertility decline reversal.
    Keywords: Fertility, Economic development, J-shaped pattern
    Date: 2018–06
  8. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Karine Pellier
    Date: 2018
  9. By: Stefan Ederer; Miriam Rehm (Federal Chamber of Labour Vienna (AT))
    Abstract: We develop and calibrate an analytical growth model in the neo-Kaleckian tradition with an endogenous wealth distribution and differential returns to wealth between workers and capitalists. We show that a long-run equilibrium allows for non-zero wealth owned by workers, even as the model contains the “triumph of the rentier” predicted by Piketty’s r > g as a special case. The model’s calibration to ten European countries shows that the distribution of wealth is likely to become more unequal in all cases, barring political countermeasures.
    Keywords: inequality, wealth, income, neo-Kaleckian theory, model calibration
    JEL: D31 E12 E21
    Date: 2017–12
  10. By: Silvia Marchesi (University of Milano Bicocca and Centro Studi Luca D'Agliano); Tania Masi (University of Milano Bicocca)
    Abstract: This paper studies the relationship between sovereign debt default and annual GDP growth taking into account the depth of a debt restructuring and distinguishing between private and official deals, as well as between debt flow and stock reduction. Analyzing 520 restructuring episodes, over the period 1975-2013, we find that private and official defaults may have different growth outcomes. Most importantly, controlling for the severity of the debt crisis, we are able to detect a more lasting and negative relationship between default and growth. While private defaults are generally associated with lower growth during the crisis and over the long run (mitigated by the amount involved), for official defaulters we do not observe a growth contraction throughout the years of the crisis and they are associated with higher growth over the long run (independently of the amount involved). When debt relief operations involve debt write offs, however, the negative relationship between private default and growth becomes blurred, while official defaulters strongly benefit in terms of growth from the face value reduction. Using the Synthetic Control Method, we present further evidence for the heterogeneity of the economic impact of debt restructurings, confirming that official and private defaults may have different effects on GDP growth and should then be treated differently.
    Keywords: Haircuts, Output losses, Sovereign defaults
    JEL: F34 G15 H63
    Date: 2018–06–04

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