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on Economic Growth |
| By: | Robert D. Cairns; Vincent Martinet |
| Abstract: | From any state of economic and environmental assets, the maximin value defines the highest level of utility that can be sustained forever. Along any development path, the maximin value evolves over time according to investment decisions. If the current level of utility is lower than this value, there is room for growth of both the utility level and the maximin value. For any resource allocation mechanism (ram) and economic dynamics, growth is limited by the long-run level of the maximin value, which is an endogenous dynamic sustainability constraint. If utility reaches this limit, sustainability imposes growth to stop, and the adoption of maximin decisions instead of the current ram. We illustrate this pattern in two canonical models, the simple fishery and a two-sector economy with a nonrenewable resource. We discuss what our results imply for the assessment of sustainability in the short- and the long-run in non-optimal economies. |
| Keywords: | sustainable development, sacrifice, growth, maximin value, sustainability improvement, resource allocation mechanism, non-optimal economies |
| JEL: | O44 Q56 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_7845&r=all |
| By: | Kenju Kamei (Durham University Business School); Louis Putterman (Brown University); Jean-Robert Tyran (University of Vienna) |
| Abstract: | TWe develop an endogenous growth model to address a long standing question whether sustainable green growth is feasible by re-allocating resource use between green (natural) and man-made (carbon intensive) capital. In our model, Önal output is produced with two reproducible inputs, green and man-made capital. The growth of the man-made capital causes depreciation of green capital via carbon emissions which the private sector does not internalize. A benevolent government uses carbon taxes to encourage Örms to substitute carbon intensive man-made capital with green capital that the production technology allows. Doing so, the damage to natural capital by emissions can be reversed through a lower, but socially optimal long run growth. This trade-o§ between environmental policy and long-run growth can be overcome by a combination of an investment in pollution abatement and higher total factor productivity. |
| Keywords: | civic engagement; public goods provision; punishment; experiment; cooperation |
| JEL: | C92 D02 D72 H41 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2019_05&r=all |
| By: | Diego Comin (Dartmouth College); Danial Lashkari (Boston College); Marti Mestieri (Northwestern University) |
| Abstract: | We develop a multi-sector endogenous growth model in which the direc- tion of innovation across sectors is endogenous. The model provides a the- oretical general equilibrium framework for studying the classical demand- pull and technology-push drivers of innovation. A robust prediction is that the rate of growth innovation growth is asymptotically higher in more income-elastic sectors. We test this prediction using the universe of U.S. patents and firm R&D investments for the period 1976-2007. The analysis lends empirical support for the main predictions of the model. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:1394&r=all |
| By: | Miguel Martín-Retortillo (Universidad de Alcalá, Spain); Vicente Pinilla (Universidad de Zaragoza e Instituto Agroalimentario de Aragón, Spain) |
| Abstract: | In recent decades, the debate on economic growth has largely focused the role-played by institutions, geography, trade, and culture. In line with this concern, this study analyses the underlying causes of agricultural productivity growth in Europe in the second half of the twentieth century. To achieve this objective, a calculation of the Total Factor Productivity growth in European agriculture is made and an econometric model is proposed to determine the importance of these fundamental causes. Our study highlights that inclusive institutions, policies to support agriculture that do not discourage innovation, qualified human capital and a full openness to international trade are key factors for favouring growth of productivity in agriculture. |
| Keywords: | Agricultural productivity, European agriculture, Fundamental causes of economic growth, Comparative economics |
| JEL: | N54 O13 O47 P51 Q10 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:1912&r=all |
| By: | Michael Dotsey (Federal Reserve Bank of Philadelphia) |
| Abstract: | We examine the role of demographics and changing industrial policies in accounting for the rapid rise in household savings and in per capita output growth in China since the mid 1970s. The demographic changes come from reductions in the fertility rate and increases in the life expectancy, while the industrial policies take many forms. These policies cause important structural changes; first benefiting private labor-intensive firms by incentivizing them to increase their share of Chinese output, and later on benefiting capital-intensive firms resulting in an increase the share of capital devoted to heavy industries. We conduct our analysis in a general equilibrium economy that also features endogenous human capital investment. We calibrate the model to match key economic variables of the Chinese economy and show that demographic changes and industrial policies both contributed to increases in savings and output growth but with differing intensities and at different horizons. We further demonstrate the importance of endogenous human capital investment in accounting for the economic growth in China. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed019:640&r=all |
| By: | Rubini, Loris; Moro, Alessio |
| Abstract: | We propose a tractable algorithm to solve stochastic growth models of structural change. Under general conditions, structural change implies an unbalanced growth path. This property prevents the use of local solution techniques when uncertainty is introduced, and requires the adoption of global methods. Our algorithm relies on the Parameterized Expectations Approximation and we apply it to a stochastic version of a three-sector structural transformation growth model with Stone-Geary preferences. We use the calibrated solution to show that in this class of models there exists a tension between the long- and the short-run properties of the economy. This tension is due to the non-homothetic components of the various types of consumption, which are needed to fit long-run structural change, but imply a counterfactually high volatility of services, and counterfactually low volatilities of manufacturing and agriculture in the short-run. |
| Keywords: | Structural Change, Stochastic Growth, Parameterized Expectations Approximation. |
| JEL: | C63 L16 O41 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96144&r=all |
| By: | Shinhye Chang (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Matthew W. Clance (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Giray Gozgor (Faculty of Political Sciences, Istanbul Medeniyet University, Istanbul, 34720, Turkey); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa) |
| Abstract: | This study re-examines the existence of an inverted U-shaped relationship between economic growth and income inequality using advanced time series techniques, which enable analyzing nonlinear long-run relationships among stochastic processes. Applying the concept of summability, balancedness, and co-summability on a sample of 55 countries from 1980 to 2010, we find no evidence in support of the nonlinear long-run relationship economic growth and income inequality. |
| Keywords: | income distribution, economic development, summability, balancedness, co-summability, cross-country studies |
| JEL: | O47 O15 C23 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:201970&r=all |
| By: | Chu, Angus C.; Furukawa, Yuichi; Mallick, Sushanta; Peretto, Pietro; Wang, Xilin |
| Abstract: | This study explores the dynamic effects of patent policy on innovation and income inequality in a Schumpeterian growth model with endogenous market structure and heterogeneous households. We find that strengthening patent protection has a positive effect on economic growth and a positive or an inverted-U effect on income inequality when the number of differentiated products is fixed in the short run. However, when the number of products adjusts endogenously, the effects of patent protection on growth and inequality become negative in the long run. We also calibrate the model to US data to perform a quantitative analysis and find that the long-run negative effect of patent policy on inequality is much larger than its short-run positive effect. This result is consistent with our empirical finding from a panel vector autoregression. |
| Keywords: | patent policy; income inequality; innovation; endogenous market structure |
| JEL: | D3 O3 O4 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96240&r=all |
| By: | Parantap Basu (Durham University Business School); Tooraj Jamasb (Durham University Business School) |
| Abstract: | We develop an endogenous growth model to address a long standing question whether sustainable green growth is feasible by re-allocating resource use between green (natural) and man-made (carbon intensive) capital. In our model, Önal output is produced with two reproducible inputs, green and man-made capital. The growth of the man-made capital causes depreciation of green capital via carbon emissions which the private sector does not internalize. A benevolent government uses carbon taxes to encourage Örms to substitute carbon intensive man-made capital with green capital that the production technology allows. Doing so, the damage to natural capital by emissions can be reversed through a lower, but socially optimal long run growth. This trade-o§ between environmental policy and long-run growth can be overcome by a combination of an investment in pollution abatement and higher total factor productivity |
| Keywords: | Green growth, sustainability, carbon tax, clean growth, resource substitution |
| JEL: | E1 O3 O4 Q2 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2019_06&r=all |
| By: | shah, Muhammad ibrahim |
| Abstract: | Innovation is at the core of fourth industrial revolution which is already under way. Both Sustainable growth and development depend on technological innovation. Traditional economic models/theories are now undermined because of new technologies like AI, automation,3D printing, robotics etc. Lack of innovation creates major socio-economic problems such as inequality, unemployment, poverty and many more. Therefore, in this competitive world, a country needs innovative people with innovative ideas to go forward. The aim of this study is to explain and critically examine the determinants of technological innovation across 5 South Asian countries using yearly data for 1980-2015 period. This paper employs several econometric techniques such as Cross sectional dependence to see if shocks that occur in one country affect another, Panel unit root test to check the stationary of the data and Panel Cointegration test to check long run relationship among the variables. This study also applies Fully Modified OLS to estimate long run coefficients and Dumitrescu and Hurlin panel causality test (2012) to see the causality between the variables. The findings suggest that democracy and human capital are negatively related to innovation, contrary to popular belief. The analysis also reveals that trade openness positively and significantly affects innovation and there exists a nonlinear, in particular an inverted U shaped relationship between innovation and financial development in South Asia. Findings from the Causality test reveals that there is bidirectional causality between total patent application and trade openness and also between financial development and human capital. This study, therefore, has several policy implications for South Asian countries. |
| Keywords: | Innovation; South Asia; Cross sectional dependence; FMOLS; Causality |
| JEL: | C01 C23 O31 O53 R11 |
| Date: | 2019–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96193&r=all |
| By: | Michael Alexeev (Indiana University, Bloomington, Indiana and the Russian Academy of National Economy and Public Administration (RANEPA), Moscow, Russia); Andrey Chernyavskiy (National Research University Higher School of Economics, (HSE) University of Moscow, Russia) |
| Abstract: | We use the 2005-2012 data for Russian regions to show that higher regional institutional quality strongly benefits institutionally-dependent manufacturing sectors in terms of both gross output levels and growth rates. Unlike the existing literature on this topic, which uses cross-sectional or pooled specifications, we focus on panel data analysis. This approach mitigates endogeneity concerns and allows for calculating full marginal effects of institutions on manufacturing sectors with different degrees of institutional dependence. Our results imply that significant institutional improvements are needed in order for the Russian economy to diversify away from heavy reliance on oil and natural gas. |
| Keywords: | relationship specificity, institutional quality, allocation of industry, Russian economy |
| JEL: | D02 O14 P27 |
| Date: | 2019–04 |
| URL: | http://d.repec.org/n?u=RePEc:inu:caeprp:2019004&r=all |
| By: | Sunita, Dr; Jain, Megha; Nagpal, Aishwarya |
| Abstract: | In the wake of industrial revolution in the late 18th and 19th centuries, technology as a seminal force has impacted everything and its effects are much more beyond the pertinent human comprehension. Most of the studies use per capita GDP as a measure to map the economic well-being of any nation but it is a narrower indicator. Human development could be considered to be the key that acts as a binding force to absorb the technological driven advancements. Taking this perspective, we contemplate the emergent prerequisite of finding the association between human capital development and information & communication technology (ICT) framework. The current study attempts to analyze how advancement in ICT could promote human capital development with special reference to South Asian Region (SAR) over the period 2000-16 by employing panel fixed effects modeling. Where, social human capital is proxied by the Human Development Index (HDI) and the the ICT penetration is measured by the parameters like technological readiness, mobile cellular subscriptions, and internet penetration. This is supplemented by other key macroeconomic control variables like population growth, urbanization sprawl, etc. in order to obtain an umbrella view. In order to have an in-depth understanding, individual component level linkages of HDI such as per capita GDP, birth life expectancy and school enrollment rate with ICT and other macroeconomic demographic indicators are also tested separately.The empirical analysis results hint towards the strong positive associations of internet penetration, technological readiness, and mobile usage with the human development index. The overall results are found to be in sync with the key findings. Therefore, the study recommends a cohesive ecosystem that could amalgamate technological space with HDI in the contemporary framework. The study further concludes with the key policy implications. |
| Keywords: | ICT, Human Development, Human Social Capital Development, Mobile, Internet, GDP, South Asia |
| JEL: | O11 O15 O19 |
| Date: | 2019–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:96167&r=all |