nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒08‒12
six papers chosen by
Marc Klemp
University of Copenhagen

  1. The Geography of Dictatorship and Support for Democracy By Maria Angelica Bautista; Felipe Gonzalez; Luis R. Martınez; Pablo Munoz; Mounu Prem
  2. Evolution and Preference for Local Risk By Heller, Yuval; Robson, Arthur
  3. Immigration and the economic performance of countries By Chletsos, Michael; Roupakias, Stelios
  4. Critical capital stock in a continuous time growth model with a convex-concave production function By Ken-Ichi Akao; Takashi Kamihigashi; Kazuo Nishimura
  5. Harrodian instability in Kaleckian models and Steindlian solutions By Eckhard Hein
  6. The human capital-economic growth nexus in SSA countries: What can strengthen the relationship? By Karambakuwa, Tapuwa; Ncwadi, Ronney; Phiri, Andrew

  1. By: Maria Angelica Bautista (University of Chicago); Felipe Gonzalez (Pontificia Universidad Catolica de Chile); Luis R. Martınez (University of Chicago); Pablo Munoz (University of California - Berkeley); Mounu Prem (Universidad del Rosario)
    Abstract: We show that proximity to military bases during the Pinochet dictatorship in Chile (1973-1990) exposed civilians to more state repression and led to (i) stronger electoral opposition to Pinochet and (ii) a long-lasting strengthening of democratic values. Our empirical strategy exploits the location of military bases during the many decades of democratic rule before the military coup, which we show is unrelated to pre-coup electoral outcomes. We find that residents of counties housing these bases both registered and voted “No†to Pinochet’s continuation in power at higher rates in the crucial 1988 plebiscite that bolstered the democratic transition. These counties also experienced more civilian deaths and forced disappearances during the dictatorship, indicating that increased exposure to repression affected voters' behavior. After democratization, residents of these counties who were exposed to the military coup report greater support for democracy in surveys, but there are no persistent effects on electoral outcomes.
    Keywords: Chile,dictatorship, repression, democratization, human rights
    JEL: D72 N46
    Date: 2019–08
  2. By: Heller, Yuval; Robson, Arthur
    Abstract: Our understanding of risk preferences can be sharpened by considering their evolutionary basis. Recently, Robatto and Szentes (2017) found that both aggregate risk and idiosyncratic risk generate the same growth rate in a continuous time setting. We introduce a new source of risk, which is correlated between agents in the same location, but is uncorrelated between agents in different locations. We show that this local risk induces a strictly higher growth rate. This shows that interdependence of risk and population structure have important implications in a continuous-time setting, and that natural selection induces individuals to prefer local risk.
    Keywords: Risk preferences, evolution, risk interdependence, long-run growth rate.
    JEL: D81 D91
    Date: 2019–07–21
  3. By: Chletsos, Michael; Roupakias, Stelios
    Abstract: Using a global dataset of over 100 developed and developing countries, we attempt to identify the nexus between immigration and the economic performance of countries, as proxied by export sophistication. To isolate causal effects, we use instruments obtained from a pseudo-gravity model of bilateral immigration in the spirit of Frankel and Rose (2002). Employing an extensive set of institutional, demographic, climate and disease controls, we find that countries with high immigrant concentrations tend to exhibit lower performance.
    Keywords: Immigration, Gravity Model, Instrumental variables, Economic complexity
    JEL: C26 F14 F22 O19
    Date: 2019–07–10
  4. By: Ken-Ichi Akao (School of Social Sciences, Waseda University, 1-6-1 Nishiwaseda Shinjuku Tokyo, 169-8050, Japan.); Takashi Kamihigashi (Research Institute for Economics and Business Administration, Kobe University, Japan.); Kazuo Nishimura (Research Institute for Economics and Business Administration, Kobe University, Japan.)
    Abstract: The critical capital stock is a threshold that appears in a nonconcave growth model, such that any optimal capital path from a stock level below (above) the threshold converges to a lower (higher) steady state. It explains history-dependent development and provides an implication for the achievement of sustainable development. The threshold is rarely an optimal steady state and thus it is hard to characterize. In a continuous time growth model with a convex-concave production function, we show that: a) the critical capital stock is continuous and increasing in the discount rate; b) as the discount rate increases, the critical capital stock appears from the zero stock level and disappears at a stock level between those of the maximum average and maximum marginal productivities; c) at this upper bound, the critical capital stock coalesces with the higher optimal steady state; d) once the critical capital stock disappears, the higher steady state is no longer an optimal steady state; and e) the critical capital stock at the upper bound can be arbitrarily close to either the stock level of the maximum average productivity or that of the maximum marginal productivity, depending on the curvature of the utility function.
    Keywords: Continuous time growth model, convex?concave production function, critical capital stock
    JEL: C61 D90 O41
  5. By: Eckhard Hein
    Abstract: The notion of dynamic instability of demand driven growth put forward by Harrod (1939) has triggered several responses in the history of economic thought. The modern Kaleckian solution, including Bhaduri/Marglin (1990) among several others, considers the rate of capacity utilisation to be endogenous beyond the short run, thus assuming, explicitly or implicitly, that Harrod's warranted rate of growth is either irrelevant or endogenous in the long run, eliminating the problem of Harrodian instability. In the modern debate several authors have criticised this Kaleckian approach, as reviewed in Hein/Lavoie/van Treeck (2011, 2012). In this debate, however, two arguments proposed by Steindl (1979, 1985) in favour of at least partial endogeneity of the warranted rate of growth have received little attention. The first is related to the endogeneity of the capital output ratio through endogenous capital scrapping (Steindl 1979); the second refers to government budget balances and the related effects on the aggregate propensity to save (Steindl 1979, 1985). In this paper we will therefore discuss in particular the two Steindlian arguments. For this purpose the model framework proposed by Hein/Lavoie/van Treeck (2011, 2012) will be extended in order to allow for endogenous capital scrapping and endogenous overall propensities to save through variations in the government financial balance.
    Keywords: Kaleckian distribution and growth models, Harrodian instability, Steindl
    JEL: E12 E20 O41
    Date: 2019
  6. By: Karambakuwa, Tapuwa; Ncwadi, Ronney; Phiri, Andrew
    Abstract: The World Bank has recently placed increasing emphasis on the role of human capital development in facilitating economic development in the Sub-Saharan African (SSA) region. Our study examines the impact of human capital on economic growth for a selected sample of 9 SSA countries between 1980 and 2016 using a panel econometric approach. Interestingly enough, our empirical analysis shows an insignificant effect of human capital on economic growth for our selected sample. These findings remain unchanged even after adding interactive terms to human capital which are representative of government spending as well as foreign direct investment. Nevertheless, we establish a positive and significant effect of the interactive term between urbanization and human capital on economic growth, a result which emphasizes the importance of developing urbanized, ‘smart’, technologically-driven cities within the SSA region as a platform towards strengthening the impact of human capital- economic growth relationship.
    Keywords: Human capital, economic growth; Sub-Saharan Africa (SSA) countries; foreign direct investment (FDI); Government spending; Urbanization
    JEL: C13 C23 C51 J24 O47
    Date: 2019–07–18

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