nep-gro New Economics Papers
on Economic Growth
Issue of 2019‒08‒19
eleven papers chosen by
Marc Klemp
University of Copenhagen

  1. Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis By Kahn, Matthew E.; Mohaddes, Kamiar; Ng, Ryan N. C.; Pesaran, M. Hashem; Raissi, Mehdi; Yang, Jui-Chung
  2. Does Female Empowerment Promote Economic Development? By Matthias Doepke; Michèle Tertilt
  3. Fertility and Modernity By Enrico Spolaore; Romain Wacziarg
  4. The Strong Porter Hypothesis in an Endogenous Growth Model with Satisficing Managers By Dominique Bianco; Evens Salies
  5. Industrial Growth in Sub-Saharan Africa: Evidence from Machine Learning with Insights from Nightlight Satellite Images By Christian S. Otchia; Simplice A. Asongu
  6. Growth Dynamics, Multiple Equilibria, and Local Indeterminacy in an Endogenous Growth Model of Money, Banking and Inflation Targeting By Rangan Gupta; Philton Makena
  7. The impact of gender inequality on economic performance in developing Countries By Stephan Klasen
  8. The Roots of Female Emancipation: From Perennial Cool Water via Pre-industrial Late Marriages to Post-industrial Gender Equality By Manuel Santos Silva; Amy C. Alexander; Stephan Klasen; Christian Welzel
  9. Gender Inequality as a Barrier to Economic Growth: a Review of the Theoretical Literature By Manuel Santos Silva; Stephan Klasen
  10. Commanding Nature by Obeying Her: A Review Essay on Joel Mokyr's A Culture of Growth By Enrico Spolaore
  11. Sovereign debt and economic growth in Zimbabwe: Amultivariate causal linkage By Saungweme, Talknice; Odhiambo, Nicholas M

  1. By: Kahn, Matthew E. (University of Southern California); Mohaddes, Kamiar (University of Cambridge); Ng, Ryan N. C. (University of Cambridge); Pesaran, M. Hashem (University of Southern California); Raissi, Mehdi (International Monetary Fund); Yang, Jui-Chung (National Tsing Hua University)
    Abstract: We study the long-term impact of climate change on economic activity across countries, using a stochastic growth model where labor productivity is affected by country-specific climate variables—defined as deviations of temperature and precipitation from their historical norms. Using a panel data set of 174 countries over the years 1960 to 2014, we find that per-capita real output growth is adversely affected by persistent changes in the temperature above or below its historical norm, but we do not obtain any statistically significant effects for changes in precipitation. Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by 7.22 percent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to 1.07 percent. These effects vary significantly across countries. We also provide supplementary evidence using data on a sample of 48 U.S. states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labor productivity and employment.
    Keywords: Climate change; economic growth; adaptation; counterfactual analysis
    JEL: C33 O40 O44 O51 Q51 Q54
    Date: 2019–07–01
  2. By: Matthias Doepke; Michèle Tertilt
    Abstract: Empirical evidence suggests that money in the hands of mothers (as opposed to fathers) increases expenditures on children. Does this imply that targeting transfers to women promotes economic development? Not necessarily. We consider a noncooperative model of the household where a gender wage gap leads to endogenous household specialization. As a result, women indeed spend more on children and invest more in human capital. Yet, depending on the nature of the production function, targeting transfers to womenmay be beneficial or harmful to growth. Transfers to women are more likely to be beneficial when human capital, rather than physical capital or land, is the most important factor of production. We provide empirical evidence supportive of our mechanism: In Mexican PROGRESA data, transfers to women lead to an increase in spending on children, but a decline in the savings rate.
    Keywords: Female Empowerment, Gender Equality, Development, Theory of the Household, Marital Bargaining
    JEL: D13 J16 O10
    Date: 2019–07
  3. By: Enrico Spolaore; Romain Wacziarg
    Abstract: We investigate the determinants of the fertility decline in Europe from 1830 to 1970 using a newly constructed dataset of linguistic distances between European regions. We find that the fertility decline resulted from a gradual diffusion of new fertility behavior from French-speaking regions to the rest of Europe. We observe that societies with higher education, lower infant mortality, higher urbanization, and higher population density had lower levels of fertility during the 19th and early 20th century. However, the fertility decline took place earlier and was initially larger in communities that were culturally closer to the French, while the fertility transition spread only later to societies that were more distant from the cultural frontier. This is consistent with a process of social influence, whereby societies that were linguistically and culturally closer to the French faced lower barriers to the adoption of new social norms and attitudes towards fertility control.
    Keywords: fertility control, diffusion, social norms, cultural barriers, demographic transition
    JEL: J10 J13 N00 N33
    Date: 2019
  4. By: Dominique Bianco (LEDi - Laboratoire d'Economie de Dijon [Dijon] - UB - Université de Bourgogne - UBFC - Université Bourgogne Franche-Comté [COMUE]); Evens Salies (OFCE - OFCE - Sciences Po - Sciences Po)
    Abstract: Few endogenous growth models have focused attention on the strong Porter hypothesis that stricter environmental policies induce innovations, the benefits of which exceed the costs. A key assumption underlying this hypothesis is that policy strictness pushes firms to overcome some obstacles to profit maximization. This paper incorporates pollution and taxation in the model of Aghion and Griffith (2005) of growth which includes satisficing managers and non-drastic innovation. Our theoretical results predict the strong Porter hypothesis. However, assuming drastic innovation in the model, we predict the weak Porter hypothesis. We also consider several extensions, such as a simultaneous competition policy or a command and control policy.
    Date: 2017–11–19
  5. By: Christian S. Otchia (Hyogo, Japan); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study uses nightlight time data and machine learning techniques to predict industrial development in Africa. The results provide the first evidence on how machine learning techniques and nightlight data can be used to predict economic development in places where subnational data are missing or not precise. Taken together, the research confirms four groups of important determinants of industrial growth: natural resources, agriculture growth, institutions, and manufacturing imports. Our findings indicate that Africa should follow a more multisector approach for development, putting natural resources and agriculture productivity growth at the forefront.
    Keywords: Industrial growth; Machine learning; Africa
    JEL: I32 O15 O40 O55
    Date: 2019–08
  6. By: Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, South Africa); Philton Makena (Department of Economics, University of Pretoria, Pretoria, South Africa)
    Abstract: We develop an overlapping generations monetary endogenous growth (generated by productive public expenditures) model with inflation targeting, characterized by relocation shocks for young agents, which in turn generates a role for money (even in the presence of the return-dominating physical capital) and financial intermediaries. Based on this model, we show that two distinct growth paths emerge conditional on a threshold value of the share of physical capital in the production function. Along one path, we find convergence to a single stable equilibrium, and on the other path, we find multiple equilibria: a stable low-growth and an unstable high-growth, with the stable low-growth equilibrium found to be locally indeterminate. Since, government expenditure is productive in our model, a higher inflation-target would translate into higher growth, but under multiple equilibria, this is not necessarily always the case.
    Keywords: Endogenous Growth, Inflation Targeting, Growth Dynamics
    JEL: C62 O41 O42
    Date: 2019–08
  7. By: Stephan Klasen
    Abstract: Despite substantial progress, gender gaps persist in many developing countries. Since the 1990s, a literature has emerged arguing that these gaps are not only inequitable, but also reduce economic performance. This review finds that, first, it is methodologically difficult to determine reliable effects of gender gaps on economic performance. Second, accounting studies that calculate how much larger GDP would be if gender gaps in employment disappeared, vastly overestimate likely effects. Third, the theoretical literature has generated important insights on mechanisms linking gender gaps to economic performance. Fourth, systematic reviews of the cross-country evidence robustly show that lowering gender gaps in education leads to higher economic performance, while the literature on the impact of other gaps is much more limited. Fifth, there is accumulating micro evidence on how reducing particular gender gaps at the level of households, farms, or firms can improve economic performance in particular contexts, with robust results in some areas, and less clear evidence in others.
    Keywords: gender inequality; economic growth; developing countries; systematic reviews
    JEL: J16 O4
    Date: 2018–01–24
  8. By: Manuel Santos Silva; Amy C. Alexander; Stephan Klasen; Christian Welzel
    Abstract: Reviewing the burgeoning literature on the deep historic roots of gender inequality, we theorize and provide evidence for an overlooked trajectory that (1) originates in a climatic configuration called the “Cool Water” (CW-) condition, from where the trajectory leads to (2) late female marriages in pre-industrial times, which eventually pave the way towards (3) various gender-egalitarian outcomes today. The CW-condition is a specific climatic configuration that combines periodically frosty winters with mildly warm summers under the ubiquitous accessibility of fresh water. The CW-condition is most prevalent in Northwestern Europe and its former colonial offshoots and embodies opportunity endowments that significantly reduce fertility pressures on women, which favored late female marriages already in the pre-industrial era. The resulting family and household patterns placed women into a better position to struggle for more gender equality during the subsequent transitions toward the industrial and post-industrial stages of development. Hence, enduring territorial differences in the CW-condition predict differences in pre-industrial female marriage ages, which in turn explain differences in gender equality today. The role of CW retains significance along this causal chain after controlling for other ‘deep drivers’ of gender inequality that have been discussed in the literature. We summarize these findings in a “seed theory of female emancipation” and conclude with a discussion of its broader implications.
    Keywords: Cool water; Economic development; Gender equality; Historic drivers; Seed theory
    JEL: J12 J16 N30 O15
    Date: 2017–11–13
  9. By: Manuel Santos Silva; Stephan Klasen
    Abstract: In this article, we survey the theoretical literature investigating the role of gender inequality in economic development. The vast majority of theories reviewed suggest that gender inequality is a barrier to development, particularly over the long run. Among the many plausible mechanisms through which inequality between men and women affects the aggregate economy, the role of women for fertility decisions and human capital investments is particularly important. Yet, we believe the body of theories could be expanded in several directions.
    Keywords: Gender equality; Economic growth; Fertility; Human capital; Comparative development
    JEL: E20 J13 J16 J24 O11 O41
    Date: 2018–08–19
  10. By: Enrico Spolaore
    Abstract: Why is modern society capable of cumulative innovation? In A Culture of Growth: The Origins of the Modern Economy, Joel Mokyr persuasively argues that sustained technological progress stemmed from a change in cultural beliefs. The change occurred gradually during the seventeenth and eighteenth century and was fostered by an intellectual elite that formed a transnational community and adopted new attitudes toward the creation and diffusion of knowledge, setting the foundation for the ethos of modern science. The book is a significant contribution to the growing literature that links culture and economics. This review discusses Mokyr’s historical analysis in relation to the following questions: What is culture and how should we use it in economics? How can culture explain modern economic growth? Will the culture of growth that caused modern prosperity persist in the future?
    Keywords: technological progress, innovation, useful knowledge, cultural change
    JEL: N13 N33 O30 O52 Z10
    Date: 2019
  11. By: Saungweme, Talknice; Odhiambo, Nicholas M
    Abstract: This paper examines the causal linkage between public debt and economic growth, and between public debt service and economic growth in Zimbabwe for the period from 1970 to 2017. The purpose of the study is to provide empirical evidence to the question "do high public debt or public debt service levels promote or reduce economic growth in Zimbabwe?" To avoid the omission-of-variable bias, fiscal balance and savings are used as intermittent variables, thereby creating a multivariate Granger-causality model. The study employs the autoregressive distributed lag (ARDL) bounds testing approach. Empirical findings indicate that there is short-run unidirectional causal flow from economic growth to public debt in Zimbabwe. Further, the study results reveal that there is no causal link between public debt service and economic growth, irrespective of whether the causality is estimated in the short run or long run. Therefore, the paper concludes that the sovereign debt overhang in Zimbabwe is mostly a result of low economic growth.
    Keywords: Zimbabwe, Granger-causality, economic growth, public debt, public debt service ARDL
    Date: 2019–08

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