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on Economic Growth |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/7n49nkmngd8448a5ts5gt5ade0 |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:bro:econwp:2020-25 |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:not:notgep:2020-03 |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:aah:aarhec:2020-17 |
| By: | Alexander Mihailov (Department of Economics, University of Reading); Harun Nasir (Department of Economics, Zonguldak Bülent Ecevit University) |
| Abstract: | This paper contributes to the theory of optimal international reserves by extending the Jeanne and Rancière (2011) endowments mall open economy (SOE) model to a SOE with capital and production that explicitly accounts for the main sources of economic growth. A first version of our set-up considers capital as the sole factor of production in the spirit of the AK model of endogenous growth with constant population, implying increasing returns to scale and justified on the grounds of its ability to generate sustained long-run growth, as observed empirically. Under a plausible calibration for typical emerging market countries facing the risk of sudden stops in capital inflows, we find that the optimal ratio of international reserves to output is 1.7%, which is quite lower than that in Jeanne and Rancière (2011), of 9.1%, even if calibrated to the same sample of 34 middle-income countries. A richer version then introduces also labour as a second factor in a conventional labour- augmenting Cobb-Douglas production function with constant returns to scale and exogenous population growth, consistent with a long-run balanced growth path and the sustained per capita income growth in the data. Under this alternative technology and the same calibration, we similarly find that the optimal reserves-to-output ratio for emerging market SOEs decreases - but not as much, being 5.5% - relative to the endowment case. We conclude that our results are explained by the role of capital accumulation as precautionary saving: the accumulated capital stock can potentially be used as a pledge to external creditors in obtaining borrowing, therefore insuring better a SOE against sudden stops. |
| Keywords: | optimal international reserves, small open economies, sudden stops,production technology, capital accumulation, precautionary saving, insurance contracts |
| JEL: | E21 E23 F32 F34 F41 O40 |
| Date: | 2020–12–03 |
| URL: | https://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-24 |
| 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 |
| URL: | https://d.repec.org/n?u=RePEc:bro:econwp:2020-22 |