nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒11‒09
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Patience and Comparative Development By Uwe Sunde; Thomas Dohmen; Benjamin Enke; Armin Falk; David Huffman
  2. Persistence through Revolutions By Alberto Alesina; Marlon Seror; David Y. Yang; Yang You; Weihong Zeng
  3. Populist Leaders and the Economy By Manuel Funke; Moritz Schularick; Christoph Trebesch
  4. Fertility Transitions in Developing Countries: Convergence, Timing, and Causes By Erasmo Papagni
  5. Remittances and Financial Development in Africa By Ibrahim A. Adekunle; Sheriffdeen A. Tella; Kolawole Subair; Soliu B. Adegboyega
  6. Accounting for Growth in Spain, 1850-2019 By Leandro Prados de la Escosura; Joan R. Rosés
  7. Patent Policy and Economic Growth: A Survey By Chu, Angus C.
  8. Resource Discoveries and the Political Survival of Dictators By Alexandra Brausmann; Elise Grieg

  1. By: Uwe Sunde (University of Munich, Department of Economics); Thomas Dohmen (University of Bonn, Department of Economics); Benjamin Enke (Harvard University, Department of Economics); Armin Falk (Institute on Behavior and Inequality (briq) and University of Bonn); David Huffman (University of Pittsburgh, Department of Economics)
    Abstract: This paper studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with both per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the quantitative magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, and aggregate production is characterized by capital-skill complementarities. This model reconciles both the correlations between patience and macroeconomic variables as well as the substantial amplification of patience elasticities at higher levels of aggregation. The results of model estimations resemble the reduced-form patterns and suggest that cross-country variation in productivity plays an important role in generating the observed comparative development patterns and aggregation effects
    Keywords: Time Preference, Comparative Development, Factor Accumulation
    JEL: D03 D90 O10 O30 O40
    Date: 2020–08
  2. By: Alberto Alesina (Harvard University, NBER, CEPR, and IGIER Bocconi); Marlon Seror (University of Bristol, Paris School of Economics and DIAL); David Y. Yang (Harvard University and NBER); Yang You (Harvard University); Weihong Zeng (
    Abstract: Can efforts to eradicate inequality in wealth and education eliminate intergenerational persistence of socioeconomic status? The Chinese Communist Revolution in the 1950s and Cultural Revolution from 1966 to 1976 aimed to do exactly that. Using newly digitized archival records and contemporary census and household survey data, we show that the revolutions were effective in homogenizing the population economically in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges today. Almost half a century after the revolutions, individuals whose grandparents belonged to the pre-revolution elite earn 16 percent more and have completed more than 11 percent additional years of schooling than those from non-elite households. In addition, individuals with pre-revolution elite grandparents hold different values: they are less averse to inequality, more individualistic, more pro-market, and more likely to see hard work as critical to success. Through intergenerational transmission of values, socioeconomic conditions thus survived one of the most aggressive attempts to eliminate differences in the population and to foster mobility.
    Date: 2020–07
  3. By: Manuel Funke (Kiel Institute for the World Economy); Moritz Schularick (University of Bonn and CEPR); Christoph Trebesch (Kiel Institute for the World Economy, CEPR and CESifo)
    Abstract: Populism at the country level is at an all-time high, with more than 25% of nations currently governed by populists. How do economies perform under populist leaders? We build a new cross-country database identifying 50 populist presidents and prime ministers 1900-2018. We find that the economic cost of populism is high. After 15 years, GDP per capita is more than 10% lower compared to a plausible non-populist counterfactual. Rising economic nationalism and protectionism, unsustainable macroeconomic policies, and institutional decay under populist rule do lasting damage to the economy.
    Date: 2020–10
  4. By: Erasmo Papagni (University of Campania L. Vanvitelli and Global Labor Organization (GLO))
    Abstract: This paper studies the dynamics of fertility in 180 countries in theperiod 1950-2015 and investigates the determinants of the onset of fertility transitions. We find evidence of convergence in three groups of countries, and distinguish the transitioning countries from those not transitioning. The estimation of the year of onset of the fertility transitionis followed by an econometric analysis of the causes of this event. Instrumental-variable estimates show that increasing female education and reduced infant mortality are important determinants of fertility decline, while per-capita GDP has probably worked in the opposite direction. These results are confirmed by the application of Lewbel's (2012) methods where identification is based on heteroskedasticity.
    Keywords: Fertility, Demographic Trends, Female Education
    JEL: J11 J13 I15 I25 C26
    Date: 2019–12
  5. By: Ibrahim A. Adekunle (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Sheriffdeen A. Tella (Olabisi Onabanjo University, Ago-Iwoye, Nigeria); Kolawole Subair (Yobe State University, Damaturu, Nigeria); Soliu B. Adegboyega (Olabisi Onabanjo University, Ogun State, Nigeria)
    Abstract: Despite the magnitude of remittances as an alternative source of investment financing in Africa, the financial sector in Africa has significantly remained underdeveloped and unstable. Finding a solution to Africa's financial deregulation problems has proved tenacious partly because of inadequate literature that explain the nature of Africa capital and financial markets which has shown to be unorganised, spatially fragmented, highly segmented and invariably externally dependent. We examine the structural linkages between remittances and financial sector development in Africa. Panel data on indices of remittances was regressed on indices of financial sector development in fifty-three (53) African countries from 1986 through 2017 using the Pooled Mean Group (PMG) estimation procedure. We accounted for cross-sectional dependence inherent in ordinary panel estimation and found a basis for the strict orthogonal relationship among the variables. Findings revealed a positive long-run relationship between remittances and financial development with a significant (positive) short-run relationship. It is suggested that, while attracting migrants' transfers which can have significant short-run poverty-alleviating advantages, in the long run, it might be more beneficial for African governments to foster financial sector development using alternative financial development strategies.
    Keywords: Remittance, Financial Development, Pooled Mean Group, Africa
    JEL: F37 G21
    Date: 2020–01
  6. By: Leandro Prados de la Escosura (Universidad Carlos III and CEPR); Joan R. Rosés (LSE and CEPR)
    Abstract: The current productivity slowdown has stimulated research on the causes of growth. We investigate here the proximate determinants of long-term growth in Spain. Over the last 170 years output per hour worked raised nearly 24-fold dominating GDP growth, while hours worked per person shrank by one-fourth and population trebled. Half of labour productivity growth resulted from capital deepening, one-third from total factor productivity, and labour quality contributed the rest. In phases of acceleration (the 1920s and 1954-85), TFP was labour productivity’s main driver complemented by capital deepening. Since Spain’s accession to the European Union (1985), labour productivity has sharply decelerated as capital deepening slowed down and TFP stagnated. Up to the Global Financial Crisis (2008) GDP growth mainly resulted from an increase in hours worked per person and, to a less extent, from sluggish labour productivity coming mostly from weak capital deepening. Institutional constraints help explain the labour productivity slowdown.
    Keywords: Growth, Labour Productivity, Capital Deepening, Labour Quality, Total Factor Productivity, Spain
    JEL: D24 E01 O47 N13 N14
    Date: 2020–10
  7. By: Chu, Angus C.
    Abstract: This survey provides a selective review of the literature on patent policy, innovation and economic growth. The patent system is a useful policy tool for stimulating innovation given its importance on technological progress and economic growth. However, the patent system is a multi-dimensional system, which features multiple patent policy instruments. In this survey, we review some of the commonly discussed patent policy instruments, such as patent length, patent breadth and blocking patents, and also use a canonical Schumpeterian growth model to demonstrate their different effects on innovation and the macroeconomy.
    Keywords: patent policy, innovation, economic growth
    JEL: O3 O4
    Date: 2020–10
  8. By: Alexandra Brausmann (Center of Economic Research, CER-ETH, Zurich, Switzerland); Elise Grieg (Center of Economic Research, CER-ETH, Zurich, Switzerland)
    Abstract: Empirical literature remains largely inconclusive as to whether resource abundance has significant political effects. In this paper we revisit the "political resource curse" by studying the effect of natural resource discoveries on the duration of autocratic leadership. We first present a dynamic stochastic model of a resource-driven coup. We extend the existing conflict models by considering both the timing of attack on the regime and the probability of its success. Both the incumbent and opposition invest in military arsenal which determines the probability of winning, while the opposition also strategically chooses when to stage a coup. We show that a random resource discovery allows the incumbent to stay in power longer by delaying the attack but also by reducing the probability of coup success under specific conditions. We test these hypotheses with a novel empirical analysis based on duration models and data on discoveries of giant oil and gas fields going back to as far as 1868. Our results show that a large hydrocarbon discovery lowers the hazard faced by an autocrat by 30 - 50%. The delay of the coup is the main driving force behind the stabilizing effect of discoveries in autocratic regimes.
    Keywords: Resource discoveries, Dictatorship, Leadership duration
    JEL: Q33 Q34 D74
    Date: 2020–10

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