nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒02‒17
twelve papers chosen by
Marc Klemp
University of Copenhagen

  1. The role of key regions in spatial development By Becker, Raphael Niklas; Henkel, Marcel
  2. Model of endogenous welfare stigma: Statistical discrimination view By Kurita, Kenichi; Hori, Nobuaki; Katafuchi, Yuya
  3. Rising longevity, increasing the retirement age, and the consequences for knowledge-based long-run growth By Kuhn, Michael; Prettner, Klaus
  4. Exports and long-run growth: The case of Spain, 1850-2017 By Bajo-Rubio, Oscar
  5. Trade and Political Fragmentation on the Silk Roads: The Economic Effects of Historical Exchange between China and the Muslim East By Blaydes, Lisa; Paik, Christopher
  6. Cultural Heritage led Growth: Regional evidence from Greece (1998-2016) By Kostakis, Ioannis; Lolos, Sarantis; Doulgeraki, Charikleia
  7. Debt and Growth: Historical Evidence By Christian Breuer; Carsten Colombier
  8. Linguistic Traits and Human Capital Formation By Galor, Oded; Özak, Ömer; Sarid, Assaf
  9. Diversity and Conflict By Cemal Eren Arbath; Quamral H. Ashraf; Oded Galor; Marc Klemp
  10. Insurance Policy Thresholds for Economic Growth in Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  11. The Effect of Increasing Human Capital Investment on Economic Growth and Poverty: A Simulation Exercise By Matthew Collin; David N. Weil
  12. Positional Preferences and Efficiency in a Dynamic Economy By Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald

  1. By: Becker, Raphael Niklas; Henkel, Marcel
    Abstract: We discuss the role of key regions in spatial development. Local productivity shocks can affect the entire economy as they expand via tight connections in the domestic production network and in uence the geographical allocation of labor. In particular, we identify the set of key regions with the highest potential to affect aggregate productivity, output, and welfare. Key regions are central locations with strong spatial linkages in the production network but are not too large and congested so they can still attract additional labor in response to positive productivity shocks without local rents and input costs rising too much. Using a spatial equilibrium model and data from German districts, we find that a relatively modest development of productivity in key regions lowered German output and welfare growth by a factor of two from 2010 to 2015.
    Keywords: Regional trade,Input-output linkages,Labour mobility,Spatial economics,Economicgeography,Regional productivity,Sectoral productivity
    JEL: R10 R12 R15 F10 F1 F16 O4 O51
    Date: 2020
  2. By: Kurita, Kenichi; Hori, Nobuaki; Katafuchi, Yuya
    Abstract: This paper tries to challenge two puzzles in the welfare benefit program. The first puzzle is non-take-up welfare which means poor people do not take-up welfare even though they are approved to take-up. Second, empirical evidence suggests that there may exist the inverse U-shaped relationship between benefit level and beneficiary ratio. We present a model of welfare stigma as a hypothesis to explain the above puzzles. Specifically, we investigate the statistical discrimination view model. Results are summarized as the relationship between two types of elasticity.
    Keywords: Stigma, Take-up, Minimum income guarantee, OECD panel data, Poverty
    JEL: H31 H53 I38
    Date: 2019–02–01
  3. By: Kuhn, Michael; Prettner, Klaus
    Abstract: We assess the long-run growth effects of rising longevity and increasing the retirement age when growth is driven by purposeful research and development. In contrast to economies in which growth depends on learning-by-doing spillovers, raising the retirement age fosters economic growth. How economic growth changes in response to rising life expectancy depends on the retirement response. Employing numerical analysis we find that the requirement for experiencing a growth stimulus from rising longevity is fulfilled for the United States, nearly met for the average OECD economy, but missed by the EU and by Japan.
    Keywords: Demographic Change,Rising Life Expectancy,Pension Reforms,Long-Run Economic Growth,R&D,Innovation
    JEL: J10 J26 O30 O41
    Date: 2020
  4. By: Bajo-Rubio, Oscar
    Abstract: We analyse in this paper the relationship between international trade and economic growth from the point of view of one of the most traditional hypotheses within this field, namely, the export-led growth hypothesis, for the case of Spain in a long-term perspective of almost 170 years. Exports seem to have played a positive, though modest, role in promoting economic growth in the Spanish economy over the whole period, mostly due to the higher productivity associated with the export sector. The contribution of exports to growth, however, seems to have been stronger in the final years of the 19th century, unlike the rest of the period, where it proved to be very small.
    Keywords: Exports,Economic growth,Spanish economy
    JEL: F41 F43 N10 O47
    Date: 2020
  5. By: Blaydes, Lisa; Paik, Christopher
    Abstract: The Silk Roads stretched across Eurasia, connecting East and West for centuries. At its height, the network of trade routes enabled merchants to travel from China to the Mediterranean Sea, carrying with them high-value commercial goods, the exchange of which encouraged urban growth and prosperity. We examine the extent to which urban centers thrived or withered as a function of shocks to trade routes, particularly political fragmentation along natural travel paths. We find that political fragmentation along the roads to Aleppo and historic Chang'an - major terminus locations for cross-regional trade - damaged city growth. These conclusions contribute to our understanding of how a pre-modern international system operated through an examination of exchange between the two most developed world regions of the medieval and early modern periods, China and the Muslim East.
    Date: 2020–01
  6. By: Kostakis, Ioannis; Lolos, Sarantis; Doulgeraki, Charikleia
    Abstract: This paper brings empirical evidence on the relationship between cultural heritage assets and economic growth. The case of Greece over the period 1998-2016 is taken as an example. Regional growth is approached through the formulation of a neoclassical growth model augmented with cultural heritage factors. Using panel methods of estimation, the empirical results reveal a positive impact of cultural heritage on regional growth, thus supporting a culture-led growth hypothesis for the Greek economy. In addition, a significant influence of other growth drivers such as physical and human capital, fertility and unemployment on regional growth is evidenced. Our results leave ample room for smart, inclusive and sustainable national, regional and EU policies to operate for the promotion of economic growth.
    Keywords: cultural heritage, regional growth, Greece
    JEL: O47 P25 Z1
    Date: 2020–01
  7. By: Christian Breuer (Chemnitz University of Technology, Department of Economics, Junior Professorship for European Economics and ZBW - Leibniz Information Centre for Economics); Carsten Colombier (FiFo - Institute for Public Economics, University of Cologne, Germany; Federal Finance Department, Bern, Switzerland)
    Abstract: In this paper we examine the relationship between public debt and economic growth in a large historical panel dataset of 17 OECD economics over the period 1870 - 2016. We do not provide evidence for a statistically significant and robust relationship between government debt and growth. While our baseline regressions support the "conventional view" that government debt is negatively associated with economic growth, particularly in the aftermath of World War II, these results appear to be not robust to alternative specifications.
    Keywords: Goverment Debt, Economic Growth, Robustness
    JEL: E62 H56 H63
    Date: 2020–01
  8. By: Galor, Oded (Brown University); Özak, Ömer (Southern Methodist University); Sarid, Assaf (University of Haifa)
    Abstract: This research establishes the influence of linguistic traits on human behavior. Exploiting variations in the languages spoken by children of migrants with identical ancestral countries of origin, the analysis indicates that the presence of periphrastic future tense, and its association with long-term orientation has a significant positive impact on educational attainment, whereas the presence of sex-based grammatical gender, and its association with gender bias, has a significant adverse impact on female educational attainment.
    Keywords: human capital, long-term orientation, gender bias, periphrastic future tense, sex-based grammatical gender, culture, language
    JEL: D91 I25 J16 J24 Z10 Z13
    Date: 2020–01
  9. By: Cemal Eren Arbath; Quamral H. Ashraf; Oded Galor; Marc Klemp
    Abstract: This research advances the hypothesis and establishes empirically that interpersonal population diversity, rather than fractionalization or polarization across ethnic groups, has been pivotal to the emergence, prevalence, recurrence, and severity of intrasocietal conflicts. Exploiting an exogenous source of variations in population diversity across nations and ethnic groups, as determined predominantly during the exodus of humans from Africa tens of thousands of years ago, the study demonstrates that population diversity, and its impact on the degree of diversity within ethnic groups, has contributed significantly to the risk and intensity of historical and contemporary civil conflicts. The findings arguably reflect the contribution of population diversity to the non-cohesivnesss of society, as reflected partly in the prevalence of mistrust, the divergence in preferences for public goods and redistributive policies, and the degree of fractionalization and polarization across ethnic, linguistic, and religious groups.
    Date: 2020
  10. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study investigates the role of insurance in economic growth on a panel of forty-eight countries in Africa for the period 2004-2014. The research question the study seeks to answer is the following: what thresholds of insurance penetration positively affect economic growth in Africa? The empirical evidence is based on Generalized Method of Moments. Life insurance increases economic growth while the effect of non-life insurance is not significant. Increasing both life insurance and non-life insurance has negative net effects on economic growth. From an extended analytical exercise, 4.149 of life insurance premium (% of GDP) is the minimum critical mass required for life insurance to positively affect economic prosperity while 1.805 of non-life insurance premium (% of GDP) is the minimum threshold required for non-life insurance to positively affect economic prosperity. Thresholds are also provided from the Hansen (1999) Panel Threshold Regression technique using a balanced sample of 28 countries.
    Keywords: Insurance; Economic Growth
    JEL: I28 I30 G20 O16 O55
    Date: 2019–01
  11. By: Matthew Collin; David N. Weil
    Abstract: We examine the dynamic responses of income and poverty to increased investment in the human capital of new cohorts of workers, using a quantitative macroeconomic model with realistic demography. Compared to a baseline in which the rate of human capital investment currently observed in every country remains constant we examine two alternative scenarios: one in which each country experiences a rate of growth of human capital investment that is typical of what was observed in the decade ending in 2015, and one in which each country raises human capital investment at a rate corresponding to the 75th percentile of what was observed in the data. In the former, world GDP per capita is 5% higher than baseline in the year 2050, while the global rate of $1.90 poverty is 0.7 percentage points lower in that year. In the latter, world GDP per capita is 12% higher than baseline in 2050, while the rate of $1.90 poverty drops by 1.4 percentage points. These gains are concentrated in poor countries. We argue in the context of our model that investing in people is more cost effective than investing in physical capital as a means to achieve specified income or poverty goals.
    Date: 2020
  12. By: Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald
    Abstract: Based on an endogenous growth model, this paper characterizes the conditions under which positional preferences do not give rise to intertemporal distortions as well as derives an optimal tax policy response in cases where these conditions are not satisfied. In our model, individuals can be positional both in terms of their consumption and wealth, the relative concerns partly reflect comparisons with people in other countries, and we distinguish between a (conventional) welfarist government and a paternalist government that does not respect positional preferences. We also extend the analysis to a multi-country framework and show that Nash-competition among local paternalist governments leads to a global social optimum, whereas Nash-competition among local welfarist governments does not.
    Keywords: Positional preferences, efficiency, intertemporal distortions, welfarist government, paternalist government, endogenous growth
    JEL: D62 E61 H11 O43
    Date: 2020–01–30

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