nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒11‒30
six papers chosen by
Marc Klemp
University of Copenhagen

  1. Quality-adjusted Population Density By J. Vernon Henderson; Adam Storeygard; David N. Weil
  2. Political Stability and Economic Prosperity: Are Coups Bad for Growth? By Gründler, Klaus
  3. The Effect of Colonial and Pre-Colonial Institutions on Contemporary Education in Africa By Leone Walters; Carolyn Chisadza; Matthew W. Clance
  4. Trade Integration, Global Value Chains and Capital Accumulation By Michael Sposi; Kei-Mu Yi; Jing Zhang
  5. Populist leaders and the economy By Funke, Manuel; Schularick, Moritz; Trebesch, Christoph
  6. The state-dependence of output revisions By Bruno Ducoudre; Paul Hubert; Guilhem Tabarly

  1. By: J. Vernon Henderson; Adam Storeygard; David N. Weil
    Abstract: Quality-adjusted population density (QAPD) is population divided by land area that has been adjusted for geographic characteristics. We derive weights on these geographic characteristics from a global regression of population density at the quarter-degree level with country fixed effects. We show, first, that while income per capita is uncorrelated with conventionally measured population density across countries, there is a strong negative correlation between income per capita and QAPD; second, that the magnitude of this relationship exceeds the plausible structural effect of density on income, suggesting a negative correlation between QAPD and productivity or factor accumulation; and third, that higher QAPD in poor countries is primarily due to population growth since 1820. We argue that these facts are best understood as results of the differential timings of economic takeoff and demographic transition across countries, and particularly the rapid transfer of health technologies from early to late developers.
    Keywords: Population density, physical geography.
    JEL: O13 O18 Q56 R12
    Date: 2020
  2. By: Gründler, Klaus
    Abstract: We provide evidence that political instability deteriorates economic growth. We establish this result based on panel difference-in-differences strategies and dynamic panel data models using a large sample of 180 countries, a novel geocoded dataset for 2,660 regions, and micro data for about 250,000 households. We exploit coups d'état as a source of exogenous variation in political instability, as they are difficult to anticipate, mirror the political zeitgeist, and reduce measurement error. We use spatial variations and synthetic control methods for identification and find that periods of instability reduce growth by 2-3 percentage points, increase unemployment, and impair health and life satisfaction.
    Keywords: Coups d'État,Economic Growth,Political Stability
    JEL: O10
    Date: 2020
  3. By: Leone Walters (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Carolyn Chisadza (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa); Matthew W. Clance (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)
    Abstract: This paper argues that contrary to previous findings, present-day education outcomes in Africa cannot be independently attributed to colonial or pre-colonial ethnic institutions. We propose that it is instead the complementarity or contention between colonial and precolonial institutions that result in education outcomes we observe today. Using geolocated DHS literacy outcomes for Cameroon, Cote d'Ivoire, Ghana, and Nigeria, our findings suggest that the positive effect of British rule on contemporary literacy is diminished in centralised ethnic regions. This paper contributes to debates on colonial and pre-colonial ethnic influences on African development, moving beyond country-level analysis.
    Keywords: Africa, Ethnic Institutions, Education
    JEL: I25 N17 Z13
    Date: 2020–11
  4. By: Michael Sposi; Kei-Mu Yi; Jing Zhang
    Abstract: Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multistage production and capital accumulation. As trade costs decline over time, global-value-chain (GVC) trade expands across countries, particularly more in the faster growing country, consistent with the empirical pattern. The presence of GVC trade boosts capital accumulation and economic growth and magnifies dynamic gains from trade. At the same time, endogenous capital accumulation shapes comparative advantage across countries, impacting the dynamics of GVC trade: a country becoming more capital abundant concentrates more on the capital-intensive stage of the production.
    Keywords: Multistage production; International trade; Capital accumulation
    JEL: E22 F10 F43
    Date: 2020–11–10
  5. By: Funke, Manuel; Schularick, Moritz; Trebesch, Christoph
    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
  6. By: Bruno Ducoudre (Observatoire français des conjonctures économiques); Paul Hubert (Observatoire français des conjonctures économiques); Guilhem Tabarly
    Abstract: This paper investigates whether economic activity dynamics predict GDP revisions using panel data from 15 OECD countries. We find that economic activity predicts GDP revisions: early releases tend to overestimate GDP growth during slowdowns –and vice-versa. We also find that the source of the predictability could be related to the sampling of information collection. Finally, the predictability comes from short-term economic activity dynamics rather than business cycle position.
    Keywords: Gross domestic product; National accounts; Revision analysis
    JEL: C23 C53 C82
    Date: 2020

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