nep-gro New Economics Papers
on Economic Growth
Issue of 2020‒12‒14
five papers chosen by
Marc Klemp
University of Copenhagen

  1. Quality-adjusted Population Density By J. Vernon Henderson; Adam Storeygard; David N. Weil
  2. The Optimal Extraction of Non-Renewable Resources under Hyperbolic Discounting By Anna M. Dugan; Timo Trimborn
  3. Artificial Intelligence, Growth and Employment: The Role of Policy By Philippe Aghion; Céline Antonin; Simon Bunel
  4. ICT and capital biased technical change By Timothy DeStefano; Richard Kneller; Jonathan Timmis
  5. The Ancient Origins of the Wealth of Nations By Quamrul H. Ashraf; Oded Galor; Marc Klemp

  1. By: J. Vernon Henderson; Adam Storeygard; David N. Weil
    Abstract: Quality-adjusted population density (QAPD) is population divided by l and 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.
    Date: 2020
  2. By: Anna M. Dugan (University of Graz, Wegener Center for Climate and Global Change and FWF Doctoral Program Climate Change); Timo Trimborn (Department of Economics and Business Economics, Aarhus University)
    Abstract: In this paper, we investigate the effects of a declining social discount rate (SDR) on the optimal extraction of non-renewable resources and economic growth. For this purpose, we introduce time-consistent hyperbolic utility discounting into models of resource extraction. First, we investigate a small model of pure resource extraction holding constant the magnitude of discounting for hyperbolic and exponential discounting. We show that resource use is more conservative under hyperbolic discounting resulting in a permanently higher resource stock. Second, we introduce hyperbolic discounting into the seminal Dasgupta-Heal-Solow-Stiglitz (DHSS) model and derive analytically that positive long-run consumption growth requires a lower rate of technological progress under hyperbolic discounting. We show numerically that resource use is more conservative under hyperbolic discounting in the medium- and long-run.
    Keywords: Hyperbolic discounting, social discount rate, non-renewable resource extraction, Dasgupta-Heal-Solow-Stiglitz model
    JEL: Q30 C60 H30
    Date: 2020–12–01
  3. By: Philippe Aghion (Harvard University); Céline Antonin (Observatoire français des conjonctures économiques); Simon Bunel
    Abstract: In this survey paper, we argue that the effects of artificial intelligence (AI) and automation on growth and employment depend to a large extent on institutions and policies. We develop a two‑fold analysis. In a first section, we survey the most recent literature to show that AI can spur growth by replacing labor by capital, both in the production of goods and services and in the production of ideas. Yet, we argue that AI may inhibit growth if combined with inappropriate competition policy. In a second section, we discuss the effect of robotization on employment in France over the 1994‑2014 period. Based on our empirical analysis on French data, we first show that robotization reduces aggregate employment at the employment zone level, and second that non‑educated workers are more negatively affected by robotization than educated workers. This finding suggests that inappropriate labor market and education policies reduce the positive impact that AI and automation could have on employment.
    Keywords: Artificial intelligence; Growth; Automation; Robots; Employment
    JEL: J24 O3 O4
    Date: 2019–12–18
  4. By: Timothy DeStefano; Richard Kneller; Jonathan Timmis
    Abstract: Historical analysis of past general purpose technologies suggest that multi-factor productivity gains are realised through both labor and capital saving features from these technologies. In this paper, we explore for the first time whether ICT leads to capital saving, generated by squeezing a greater amount of economic activity into a smaller amount of space. To do so we use new regional data on building capital for the UK and cross-space and time variation in broadband connection speeds over an 18 year period. We find evidence of capital biased technical change, where the long-term effects of ICTs are linked to a reduction of the geographic footprint of businesses and these results are robust to wide-ranging robustness, falsification and endogeneity bias tests. The capital biased technical change effects of ICT provide a new perspective on the recent discussion about the ‘death of the high street’ and, as this type of capital is typically assumed to be constant, likely represents an aspect of TFP missing from estimates constructed at both the micro and macro level
    Keywords: ICT; technical change; general purpose technology
    Date: 2020
  5. By: Quamrul H. Ashraf; Oded Galor; Marc Klemp
    Abstract: This essay explores the deepest roots of economic development. It underscores the significance of evolutionary processes in shaping fundamental individual and cultural traits, such as time preference, risk and loss aversion, and predisposition towards child quality, that have contributed to technological progress, human-capital formation, and economic development. Moreover, it highlights the persistent mark of the exodus of Homo sapiens from Africa tens of thousands of years ago on the degree of interpersonal population diversity across the globe and examines the impact of this variation in diversity for comparative economic, cultural, and institutional development across countries, regions, and ethnic groups.
    Date: 2020

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