nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒09‒14
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Demographic Change and Development from Crowdsourced Genealogies in Early Modern Europe By Guillaume Blanc
  2. A new model of technical change and an application to the Solow model By Mehdi Senouci; Hugo Mauron
  3. Cliometrics and the Evolution of Human Capital By Claude Diebolt; Roger Fouquet; Ralph Hippe
  4. Technology Diffusion By Nancy Stokey
  5. Propensity to Consume and the Optimality of Ramsey-Euler Policies By Tapan Mitra; Santanu Roy
  6. Trade Disruption, Industrialisation, and the Setting Sun of British Colonial Rule in India By Roberto Bonfatti; Björn Brey
  7. Nature versus Nurture in Social Mobility under Private and Public Education Systems By Simon Fan; Yu Pang; Pierre Pestieau
  8. Political Instability and Economic Growth at Different Stages of Economic Development: historical evidence from Greece By Sotiris K. Papaioannou

  1. By: Guillaume Blanc (Brown University)
    Abstract: This paper draws on a novel historical dataset crowdsourced from publicly available genealogies to study demographic change and development at the individual level in the distant past. I reconstruct fertility series, identify migration in and out of urban centers, and provide novel measures and stylized facts in a period without census and with millions of ordinary individuals observed in thirty countries. For each country, I carefully show that selection is limited in the data. Then, I document patterns of human mobility, fertility, and adult mortality in Early Modern Europe, through the Industrial Revolution and demographic transition. Finally, I present several findings at a disaggregated level suggesting that substantial and rapid changes in preferences took hold with the Age of Enlightenment and played an important role in the transition from stagnation to growth. In particular, I estimate the onset of the decline in fertility in France in the 1760s, a hundred years before the rest of Europe and earlier than previously thought, and I find a weaker intergenerational persistence of fertility behavior in Europe as early as in the late eighteenth century.
    Keywords: demographic,development,migration,health
    Date: 2020–08–26
  2. By: Mehdi Senouci (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec); Hugo Mauron (CentraleSupélec)
    Abstract: We present an alternative form of technical change within the traditional two-input framework. The aggregate production function is the convex hull of an increasing, finite number of Leontief production functions. At each date, each of these local production functions mutates into two Leontief production functions: one featuring exogenously increased labor-augmenting productivity, the other featuring exogenously increased capital-augmenting productivity. We embed this model of technical change into an otherwise standard, discrete-time Solow model. We do not specify technical change as purely labor-augmenting; still, it comes out that this modified Solow model has a globally stable balanced growth path. Along this path, technical change jointly determines the growth rate, capital-output ratio, and marginal productivity of capital and the competitive factor shares.
    Keywords: Directed technical change,Uzawa theorem,Balanced growth path,Solow model
    Date: 2020–08–24
  3. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UL - Université de Lorraine - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Roger Fouquet (Monsanto Company); Ralph Hippe (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UL - Université de Lorraine - UNISTRA - Université de Strasbourg)
    Abstract: Human capital has been seen to be a key factor for current and future economic growth. In a broader sense, it appears that we are moving towards a knowledge economy driven by human capital, technological progress and digitalization. However, although this evolution may be a new trend, similar developments have occurred in history before. In line with this reasoning, the scholarly feld of cliometrics has received ever more attention during the last years. In consequence, this paper presents the foundations of cliometrics, and provides insights into the basic conceptual framework and evolution of human capital during the last centuries.
    Keywords: Human Capital,Cliometrics,ICT,Economic Development,Economic Development JEL codes: I21,N90,O18
    Date: 2020
  4. By: Nancy Stokey
    Abstract: The importance of new technologies derives from the fact that they spread across many different users and uses, as well as different geographic regions. The diffusion of technological improvements, across producers within a country and across international borders, is critical for long run growth. This paper looks at some evidence on adoption patterns in the U.S. for specific innovations, reviews some evidence on the diffusion of new technologies across international boundaries, and looks at two theoretical frameworks for studying the two types of evidence. One focuses on the dynamics of adoption costs, the other on input costs.
    JEL: O14 O33
    Date: 2020–07
  5. By: Tapan Mitra (Cornell University); Santanu Roy (Southern Methodist University)
    Abstract: In a general one-sector optimal stochastic growth model where the production technology may be globally unproductive or may allow for unbounded growth, a policy function satisfying the Ramsey-Euler condition may not be optimal even if consumption and investment are continuous and increasing in output. We outline verifiable sufficient conditions for optimality that do not require checking the transversality condition. In addition to continuity (or monotonicity), these conditions impose lower bounds on the propensity to consume. In the case of production functions with multiplicative shocks, the consumption propensity needs to be bounded away from zero; a similar condition is sufficient for more general production functions if the utility function belongs to a restricted class.
    Keywords: Stochastic growth, optimal economic growth, uncertainty, unbounded growth, unproductive technology, transversality condition, optimality conditions, Euler equation.
    JEL: C6 D9 O41
    Date: 2020–06
  6. By: Roberto Bonfatti; Björn Brey
    Abstract: Colonial trade encouraged the colonies to specialise in primary products. Did this prevent in-dustrialisation in the colonies? And did lack of industrialisation, in turn, help to keep the colonies under control? To answer these questions, we examine the impact of the temporary collapse in trade between Britain and India due to World War I, on industrialisation and anti-imperial feelings in India. Exploiting cross-district variation in exposure to the trade shock stemming from initial differences in industrial specialisation, we find that districts more exposed to the trade shock experienced substantially faster industrial growth in 1911-21, placing them on a higher level of industrialisation which has persisted up to today. Using the World War I trade shock as an instrument for industrialisation levels, we also find that more industrialised districts were more likely to express anti-imperial feelings in 1922, and to vote for the Indian National Congress in the landmark election of 1937. These results suggest that colonial trade may have played an important role in preventing colonial industrialisation, and in embedding foreign rule.
    Keywords: colonial trade, India, infant-industry argument, decolonisation
    JEL: F14 F54 O14 N65
    Date: 2020
  7. By: Simon Fan; Yu Pang; Pierre Pestieau
    Abstract: This paper analyzes the roles of innate talent versus family background in shaping intergenerational mobility and social welfare under different education systems. We establish an overlapping-generations model in which the allocation of workforce between a high-paying skilled labor sector and a low-paying unskilled labor sector depends on talent, parental human capital, and educational resources, and the wage rate of skilled workers is governed by their average talent. Our model suggests that under the private education system, income inequality is inversely associated with social mobility, and the steady-state average talent of skilled workers declines as people make greater educational investments on their children. Under the public school system, the allocation of workforce depends more on talent and less on family background. Consequently, both intergenerational mobility and income inequality increase, and social welfare may improve under reasonable conditions. Moreover, if some parents are myopic, public education may yield the highest welfare.
    Keywords: innate ability, private education, public education, intergenerational mobility
    JEL: H20 H31 H50 O11
    Date: 2020
  8. By: Sotiris K. Papaioannou
    Abstract: This study explores the relationship between political instability and growth within the perspective of GreeceÕs modern history. The narrative approach is used to identify major events of political unrest which took place in the period from 1833 onwards. Econometric estimates show that political instability exerts an adverse effect on economic growth. Likewise, poor economic performance increases the likelihood of political risk. Their relationship is not uniform across time but strengthens only after the second half of the 20th century. The impact of political instability is conditional on the stage of economic development with the most harmful effect observed in the phase of rapid industrialization. When distinguishing between permanent and temporary effects of political instability, a strongly negative effect is observed on the growth rate of potential output and a weakly negative impact on the cyclical component of GDP. Political instability is unfavorably affected by the growth rate of potential output.
    Keywords: Political instability, economic growth, Greece
    Date: 2020–08

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