nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒01‒28
fifteen papers chosen by
Marc Klemp
University of Copenhagen

  1. Family Planning and Climate Change By Reyer Gerlagh; Veronica Lupi; Marzio Galeotti
  2. Quality of Schooling: Child Quantity-Quality Tradeoff, Technological Progress and Economic Growth By Swati Saini; Meeta Keswani Mehra
  3. Folklore By Stelios Michalopoulos; Melanie Meng Xue
  4. Population growth and industrialization By Zhou, Haiwen
  5. The rural exodus and the rise of Europe By Thomas Baudin; Robert Stelter; ;
  6. The Rise and Fall of Family Firms in the Process of Development By Carillo, Maria Rosaria; Lombardo, Vincenzo; Zazzaro, Alberto
  7. Childlessness and Economic Development: A Survey By Thomas Baudin; David de la Croix; Paula E. Gobbi;
  8. Demographics, Old-Age Transfers and the Current Account By Mai Chi Dao; Callum Jones
  9. Mastering Panel 'Metrics: Causal Impact of Democracy on Growth By Shuowen Chen; Victor Chernozhukov; Iv\'an Fern\'andez-Val
  10. Thirty years of economic growth in Africa By João Amador; António R. dos Santos
  11. Human Capital and Economic Growth By Claude Diebolt; Charlotte Le Chapelain
  12. Is there a Latin American agricultural growth pattern? Factor endowments and productivity in the second half of the twentieth century By Miguel Martín-Retortillo; Vicente Pinilla; Jackeline Velazco; Henry Willebald
  13. The impact of FDI on economic growth in Tunisia: An estimate by the ARDL approach By Bouchoucha, Najeh; Ali, Walid
  14. Foreign aid,poverty and economic growth in developing countries: A dynamic panel data causality analysis By Mahembe, Edmore; Odhiambo, Nicholas M
  15. What determines the elasticity of substitution between capital and labor? A literature review By Knoblach, Michael; Stöckl, Fabian

  1. By: Reyer Gerlagh; Veronica Lupi; Marzio Galeotti
    Abstract: The historical increase in emissions is for one-fourth attributable to the growth of emissions per person, whereas three-fourths are due to population growth. This striking evidence is not represented in the majority of climate-economic studies, which mostly neglect the environmental consequences of individuals’ reproductive decisions. In this paper, we study the interactions between climate change and population dynamics. We develop an analytical model of endogenous fertility and embed it in a calibrated climate-economy model. Our results present family planning as an integral part of climate policies and quantify the costs of neglecting the interaction.
    Keywords: fertility, climate change, population, carbon tax, fertility tax, climate-economy models
    JEL: J11 J13 H23 Q54 Q56
    Date: 2018
  2. By: Swati Saini (Jawaharlal Nehru University); Meeta Keswani Mehra (Jawaharlal Nehru University)
    Abstract: An overlapping generations version of an R&D-based growth model ‘a la Diamond (1965) and Jones (1995) is built to examine how improvement in quality of schooling impact technical progress and long- run economic growth of an economy by influencing fertility and education decisions at household level. The results indicate that improvement in schooling quality triggers a child quantity-quality trade-off at household level when quality of schooling exceeds an endogenously determined threshold. At the household level, parents invest more in education of children and have lesser number of children in response to improvement in quality of schooling. This micro-level tradeoff has two opposing effects on aggregate human capital accumulation at macro level. Higher investment in education of a child stimulates the accumulation of human capital which fosters technical progress but the simultaneous decline in fertility rate reduces the total factor productivity growth and economic growth by contracting the pool of available researchers. The first effect prevails over latter only when quality of schooling is higher than the threshold.Length:53 pages
  3. By: Stelios Michalopoulos; Melanie Meng Xue
    Abstract: Folklore is the collection of traditional beliefs, customs, and stories of a community, passed through the generations by word of mouth. This vast expressive body, studied by the corresponding discipline of folklore, has evaded the attention of economists. In this study we do four things that reveal the tremendous potential of this corpus for understanding comparative development and culture. First, we introduce and describe a unique catalogue of folklore that codes the presence of thousands of motifs for roughly 1,000 pre-industrial societies. Second, we use a dictionary-based approach to elicit group-specific measures of various traits related to the natural environment, institutional framework, and mode of subsistence. We establish that these proxies are in accordance with the ethnographic record, and illustrate how to use a group’s oral tradition to quantify non-extant characteristics of preindustrial societies. Third, we use folklore to uncover the historical cultural values of a group. Doing so allows us to test various influential conjectures among social scientists including the original affluent society, the culture of honor among pastoralists, the role of family in extended kinship systems and the intensity of trade and rule-following norms in politically centralized group. Finally, we explore how cultural norms inferred via text analysis of oral traditions predict contemporary attitudes and beliefs.
    JEL: N00 Z1 Z13
    Date: 2019–01
  4. By: Zhou, Haiwen
    Abstract: This paper formalizes Rostow’s insight of the role of a leading sector in industrialization in a general equilibrium model. Population growth may lead to a shortage of food and a breakdown of the industrialization process. However, population growth may benefit the manufacturing sector in the adoption of increasing returns to scale technologies. Elasticity of demand for agricultural goods plays an important role in determining whether an improvement of agricultural technology or an increase of population is beneficial to the manufacturing sector. A comparison of China and Britain before the Industrial Revolution shows that R&D is necessary for sustained growth. Achieving industrialization independently requires a combination of a sufficient market size from the demand side and a sufficient supply of technologies from the supply side.
    Keywords: Population growth, increasing returns to scale, industrialization, leading sector, Malthus population cycle
    JEL: E10 N10 O14 Q01
    Date: 2019–01–13
  5. By: Thomas Baudin (IÉSEG School of Management); Robert Stelter (Max Planck Institute for Demographic Research); ;
    Abstract: To assess the importance of the rural exodus in fostering the transition from stagnation to growth, we propose a unified model of growth and internal migrations. Using an original set of Swedish data, we identify the deep parameters of our model. We show that internal migration conditions had to be favorable enough to authorize an exodus out of the countryside in order to fuel the industrial development of cities. We then compare the respective contribution of shocks on internal migration costs, infant mortality and inequalities in agricultural productivity to the economic take-off and the demographic transition that occurred in Sweden. Negative shocks on labor mobility generate larger delays in the take-off to growth compared to mortality shocks equivalent to the Black Death. Deepening inequalities of productivity in the agricultural sector, like it has been done by enclosure movements, contributes to accelerate urbanization at the cost of depressed economic growth.
    Keywords: Demographic transition, Industrialization, Rural exodus, Mortality differentials, Fertility differentials.
    JEL: J11 J13 O41
    Date: 2019–01
  6. By: Carillo, Maria Rosaria; Lombardo, Vincenzo; Zazzaro, Alberto
    Abstract: This paper explores the causes and the consequences of the evolution of family firms in the growth process. The theory suggests that in early stages of development, valuable family specific human capital stimulated the productivity of family firms and the development process. However, in light of the rise in the importance of managerial talents for firms' productivity in later stages, family firms generated a misallocation of managerial talents, curbing productivity and economic growth. Evidence supports the dual impact of family firms in the development process and the role of socio-cultural characteristics in observed variations in the productivity of family firms.
    Keywords: Family firms, economic development and growth, culture and social structure, allocation of talents, industrialization
    JEL: D2 J62 L26 O14 O33 O4 Z1
    Date: 2019–01–03
  7. By: Thomas Baudin (IÉSEG School of Management); David de la Croix (IRES, Université catholique de Louvain & CEPR, London); Paula E. Gobbi (ECARES, Université libre de Bruxelles & CEPR, London);
    Abstract: This paper provides an introduction to the analysis of childlessness, first by describing the stylized facts and the relevant literature, and then by proposing a theoretical framework. We show that both poverty-driven childlessness and opportunity-driven childlessness matter and are essential to a thorough understanding of childlessness as a socioeconomic phenomenon.
    Keywords: Childlessness, fertility, education, marriage, children, sterility, economic development, poverty-driven childlessness, opportunity-driven childlessness, female empowerment, childcare, Malthusian economy, educational homogamy, reproductive health, demographic economics, developed countries, developing countries, historical childlessness, quantity and quality of children, inequality
    JEL: J11 O11 O40
    Date: 2019–01
  8. By: Mai Chi Dao; Callum Jones
    Abstract: Building on the evolving literature on the topic, this paper reviews the relationship between demographics and long-run capital flows in both theory and in the data. For this purpose, we develop a two region overlapping generations model where countries differ in their population growth and mortality risk. Besides exploring the implications of demographics for saving and the current account over the long-run, we also study how these might be affected by differences in the coverage and sustainability of old-age transfer schemes. The model predicts that population structure and life expectancy (which affects the need to save to meet old age consumption) affect current account levels, and that while countries with more generous unfunded transfer schemes tend to have lower saving and more capital inflows over the long-run, this effect may be dampened by natural limits (on taxation) of these schemes. The key predictions of the model are generally supported by a rich panel dataset.
    Keywords: Pensions;Demographic indicators;Current account balances;Current account surpluses;Capital flows;Aging;Demographics, Current Account Flows, External Imbalances, General
    Date: 2018–12–07
  9. By: Shuowen Chen; Victor Chernozhukov; Iv\'an Fern\'andez-Val
    Abstract: The relationship between democracy and economic growth is of long-standing interest. We revisit the panel data analysis of this relationship by Acemoglu, Naidu, Restrepo and Robinson (forthcoming) using state of the art econometric methods. We argue that this and lots of other panel data settings in economics are in fact high-dimensional, resulting in principal estimators -- the fixed effects (FE) and Arellano-Bond (AB) estimators -- to be biased to the degree that invalidates statistical inference. We can however remove these biases by using simple analytical and sample-splitting methods, and thereby restore valid statistical inference. We find that the debiased FE and AB estimators produce substantially higher estimates of the long-run effect of democracy on growth, providing even stronger support for the key hypothesis in Acemoglu, Naidu, Restrepo and Robinson (forthcoming). Given the ubiquitous nature of panel data, we conclude that the use of debiased panel data estimators should substantially improve the quality of empirical inference in economics.
    Date: 2019–01
  10. By: João Amador; António R. dos Santos
    Abstract: This paper examines the contribution of employment, capital accumulation and total factor productivity (TFP) to economic growth in African countries over the period 1986-2014. The methodology consists in the estimation of a translog dynamic stochastic production frontier for a set of 49 African economies, thus allowing for the breakdown of TFP along efficiency developments and technological progress. Although the heterogeneity amongst African countries poses a challenge to the estimation of a common production frontier, this is the best approach to perform cross-country comparisons. The results of our growth accounting exercise are more accurate for the contribution of input accumulation and TFP to GDP growth than for the separation between contributions of technological progress and efficiency. We conclude that economic growth patterns differ across African countries but they have been almost totally associated to input accumulation, notably in what concerns capital. The experience of Egypt, Nigeria and South Africa - the three largest African economies - confirms this pattern.
    Keywords: Africa, Development, Growth Accounting, Dynamic Stochastic Frontiers
    Date: 2018
  11. By: Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Charlotte Le Chapelain (CLHDPP-BETA, University of Lyon 3, Lyon, France)
    Date: 2019
  12. By: Miguel Martín-Retortillo (Universidad de Alcalá); Vicente Pinilla (Universidad de Zaragoza and Instituto Agroalimentario de Aragón (IA2)); Jackeline Velazco (Pontificia Universidad Católica del Perú); Henry Willebald (Universidad de la República)
    Abstract: In this article we discuss whether there was a single Latin American pattern of agricultural growth between 1950 and 2008. We analyse the sources of growth of agricultural production and productivity in ten Latin American countries. Our results show that the differences between these countries are too strong to establish a single pattern for this region. However, certain common trends may be observed, such as the growing importance of labour productivity to explain agricultural production growth and the increasing importance of TFP to explain agricultural labour productivity growth.
    Keywords: Latin American Economic History, Latin American Agriculture, Agricultural Productivity, Agricultural Growth, Total Factor Productivity
    JEL: N56 Q10 Q11
    Date: 2019–01
  13. By: Bouchoucha, Najeh; Ali, Walid
    Abstract: This paper attempts to examine the impact of foreign direct investment on economic growth in Tunisia using times series data for the period 1980-2015. In this study, we used the ARDL (Autoregressive Lag Distribution) approach to study the short-term and long-term relationship between foreign direct investment and economic growth. The empirical findings show that FDI has positive impact on economic growth in both the short and the long term. For the other determinants of economic growth, we have shown that domestic investment and human capital have had a positive and significant effect on the economic growth of the Tunisian economy in the short run rather than in the long run. On the other hand, the degree of trade openness has a negative effect on short-term and long-term economic growth.
    Keywords: FDI, economic growth, Tunisia, ARDL
    JEL: F0 F43
    Date: 2019–01–14
  14. By: Mahembe, Edmore; Odhiambo, Nicholas M
    Abstract: This article examines the causal relationship between foreign aid, poverty and economic growth in 82 developing countries for the period 1981???2013. Taking advantage of the recently developed dynamic panel data estimation techniques, the paper tests for both panel unit roots and cointegration before employing the panel vector error-correction model (VECM) Granger causality test. The main findings are that in the short run, there was evidence of (a) a bidirectional causal relationship between economic growth and poverty; (b) a unidirectional causal relationship from economic growth to foreign aid; and (c) unidirectional causality from poverty to foreign aid. In the long-run, the study found that (a) foreign aid tends to converge to its long-run equilibrium path in response to changes in economic growth and poverty; and (b) both economic growth and poverty jointly Granger cause foreign aid.
    Keywords: official development assistance (ODA); foreign aid; poverty; economic growth; dynamic panel data analysis; Granger Causality; vector error-correction model (VECM).
    Date: 2019–01
  15. By: Knoblach, Michael; Stöckl, Fabian
    Abstract: This paper reviews the status quo of the empirical and theoretical literature on the determinants of the elasticity of substitution between capital and labor. Our focus is on the two-input constant elasticity of substitution (CES) production function. By example of the U.S., we highlight the distinctive heterogeneity in empirical estimates of σ at both the aggregate and industrial level and discuss potential methodological explanations for this variation. The main part of this survey then focuses on the determinants of σ. We first review several approaches to the microfoundation of production functions, especially the CES production function. Second, we outline the construction of an aggregate elasticity of substitution (AES) in a multi-sectoral framework and investigate its dependence on underlying sectoral elasticities. Third, we discuss the influence of the institutional framework on the determination of σ. The concluding section of this review identifies a number of potential empirical and theoretical avenues for future research. Overall, we demonstrate that the effective elasticity of substitution (EES), which is typically estimated in empirical studies, is generally not an immutable deep parameter but depends on a multitude of technological, non-technological and institutional determinants.
    Keywords: elasticity of substitution,aggregate elasticity,capital,labor,economic growth,microfoundation,Cobb-Douglas and CES production function
    JEL: D24 E23 O14 O40
    Date: 2019

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