nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒07‒27
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Food, Fuel and the Domesday Economy By Juan Moreno-Cruz; M. Scott Taylor
  2. Economic Integration and Democracy: An Empirical Investigation By Magistretti, Giacomo; Tabellini, Marco
  3. Gifts of the Immigrants, Woes of the Natives: Lessons from the Age of Mass Migration By Tabellini, Marco
  4. Growth, Automation and the Long Run Share of Labor By Mookherjee, Dilip; Ray, Debraj
  5. Upward-Flowing Intergenerational Transfers in Economic Development: The Role of Family Ties and their Cultural Transmission By Varvarigos, Dimitrios
  6. Reallocation effects of monetary policy By Daisuke Miyakawa; Koki Oikawa; Kozo Ueda
  7. Human Capital Accumulation at Work: Estimates for the World and Implications for Development By Remi Jedwab; Asif Islam; Paul Romer; Robert Samaniego
  8. Effects of Monetary Policy in a Model with Cash-in-Advance Constraints on R&D and Capital Accumulation By Daiki Maeda; Yuki Saito

  1. By: Juan Moreno-Cruz; M. Scott Taylor
    Abstract: This paper develops a theory where access to food and fuel energy is critical to the location, number, and size of human settlements. By combining our theory with a simple Malthusian mechanism, we generate predictions for the distribution of economic activity and population across geographic space. We evaluate the model using data drawn from the very first census undertaken in the English language - the Domesday census - commissioned by William the Conqueror in 1086 A.D. Using G.I.S. data and techniques we find strong evidence that Malthusian forces determined the population size and the number of settlements in Domesday England.
    JEL: Q4 R12
    Date: 2020–06
  2. By: Magistretti, Giacomo; Tabellini, Marco
    Abstract: We study whether economic integration fosters the process of democratization and the channels through which this might happen. Our analysis is based on a large panel dataset of countries between 1950 and 2014. We instrument actual trade with predicted trade constructed by estimating a time-varying gravity equation similar to Feyrer (2009). We find that economic integration has a positive effect on democracy, driven by trade with democratic partners and stronger for countries with lower initial levels of economic and institutional development. These results are consistent with a learning/cultural exchange process whereby economic integration promotes the spread of democracy from more to less democratic countries. We corroborate this interpretation by providing evidence against alternative mechanisms, such as income effects, human capital accumulation, and trade-induced changes in inequality.
    Keywords: democracy; economic integration; Institutional development; international trade
    JEL: F14 F15 P16
    Date: 2020–01
  3. By: Tabellini, Marco
    Abstract: In this paper, I jointly investigate the political and the economic effects of immigration and study the causes of anti-immigrant sentiments. I exploit exogenous variation in European immigration to U.S. cities between 1910 and 1930 induced by World War I and the Immigration Acts of the 1920s as well as instrument immigrants' location decision relying on pre-existing settlement patterns. I find that immigration triggered hostile political reactions, such as the election of more conservative legislators, higher support for anti-immigration legislation, and lower redistribution. Exploring the causes of natives' backlash, I document that immigration increased natives' employment, spurred industrial production, and did not generate losses even among natives working in highly exposed sectors. These findings suggest that opposition to immigration was unlikely to have economic roots. Instead, I provide evidence that natives' political discontent was increasing in the cultural differences between immigrants and natives. Results in this paper indicate that, even when diversity is economically beneficial, it may nonetheless be socially hard to manage.
    Keywords: Age of Mass Migration; Cultural diversity; Immigration; Political Backlash
    JEL: J15 J24 N32
    Date: 2020–01
  4. By: Mookherjee, Dilip; Ray, Debraj
    Abstract: We provide an argument for long-term automation and decline in the labor income share, driven by capital accumulation rather than technical progress or rising markups. We emphasize a fundamental asymmetry across physical and human capital. An individual can indefinitely replicate her claims on the former, but --- after a point --- her human endowment cannot be cloned and rescaled in the same way. Then ongoing capital accumulation gives rise to progressive automation, and the share of labor income converges to zero. The displacement of human labor is gradual, and real wages could rise indefinitely. The results extend to endogenous technical change.
    Date: 2020–01
  5. By: Varvarigos, Dimitrios
    Abstract: I construct a model where upward-flowing income transfers, from adult children to their old parents, are driven by a culture of strong family ties. This evolves intergenerationally, through a process of cultural transmission. The two-way causal link between economic and cultural change can be a strong enough force to offset cultural substitution, thus generating path-dependent outcomes. These outcomes are consistent with empirical evidence showing that economic development is negatively related with upward-flowing intergenerational transfers, and with the strength of family ties. On the one hand, the economy may follow a convergence path towards a low level of economic development, where adherence to strong family ties is the dominant characteristic of a culturally homogeneous population, and where the overall flow of intergenerational transfers is substantial. On the other hand, the economy may follow a different path of convergence towards a relatively higher level of economic development, where the population is more diverse in terms of their attitudes on family ties, and where the overall flow of intergenerational transfers is lower by comparison.
    Keywords: Economic development; Intergenerational transfers; Family ties; Cultural Transmission
    JEL: D64 O1 O41 Z1
    Date: 2020–06–09
  6. By: Daisuke Miyakawa; Koki Oikawa; Kozo Ueda
    Abstract: Responding to the increased attention on the distributional aspects of monetary policy, we investigate the reallocation among heterogeneous firms triggered by nominal growth. Japanese firm-level data show that large firms invest more in R&D and grow faster than small firms under higher inflation. We then construct a model that introduces nominal rigidity into R&D-driven endogenous growth with heterogeneous firms. The model shows that high nominal growth leads to an increase in the market share of innovative firms because menu-cost burdens are relatively heavier for less innovative firms. This reallocation effect yields a positive effect of monetary expansion on both real growth and welfare. The optimal nominal growth can be strictly positive even under nominal rigidity. Moreover, the presence of menu costs can improve welfare.
    Keywords: Reallocation, firm dynamics, creative destruction, menu cost, optimal inflation rate
    JEL: E5 O3 O4
    Date: 2020–06
  7. By: Remi Jedwab (George Washington University); Asif Islam (World Bank); Paul Romer (New York University); Robert Samaniego (George Washington University)
    Abstract: In this paper, we: (i) study wage-experience profiles and obtain measures of returns to potential work experience using data from about 24 million individuals in 1,084 household surveys and census samples across 145 countries; (ii) show that returns to work experience are strongly correlated with economic development - workers in developed countries appear to accumulate twice more human capital at work than workers in developing countries; and (iii) use a simple accounting framework to find that the contribution of work experience to human capital accumulation and economic development might be as important as the contribution of education itself.
    Keywords: Returns to Work Experience, Returns to Education, Human Capital Accumulation, Economic Development, Labor Markets, Development Accounting
    JEL: O11 O12 O15 O47 E24 J11 J31
    Date: 2020–03
  8. By: Daiki Maeda; Yuki Saito
    Abstract: To examine the effect of monetary policy on economic growth, we formulate an endogenous growth model with cash-in-advance constraints on R&D and capital accumulation as endogenous growth engines. Within this framework, we show that the relationship between economic growth and the nominal interest rate can be an inverted-U shape. Moreover, we demonstrate that the welfare-maximizing level of the nominal interest rate is larger than the growth-rate-maximizing level of the nominal interest rate.
    Date: 2020–02

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