nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒03‒01
nine papers chosen by
Marc Klemp
University of Copenhagen

  1. Culture, Institutions & the Long Divergence By Alberto Bisin; Jared Rubin; Avner Seror; Thierry Verdier
  2. Technology Diffusion By Nancy Stokey
  3. European Countries on a green path. Connections between environmental quality, renewable energy and economic growth By Abbruzzese, Matteo; Infante, Davide; Smirnova, Janna
  4. Energising Mexico: Historical Energy Consumption, Transitions and Economic Growth 1880-2015 By Castañeda Garza, Diego
  5. Tapping into Talent: Coupling Education and Innovation Policies for Economic Growth By Ufuk Akcigit; Jeremy Pearce; Marta Prato
  6. Historical Instruments and Contemporary Endogenous Regressors By Gregory Casey; Marc Klemp
  7. Fertility Changes and Replacement Migration By Yunus Aksoy; Gylfi Zoega
  8. Growth Accounting in the Dominican Republic 1990-2018: new evidence By Franco Frizzera; Martín Grandes
  9. Analysis of the relationship between financial development and economic growth in the EU countries By Edmunds Čižo; Olga Lavrinenko; Svetlana Ignatjeva

  1. By: Alberto Bisin (NYU, NBER, and CEPR); Jared Rubin (Chapman University); Avner Seror (Aix-Marseille School of Economics); Thierry Verdier (PSE, Ecole des Ponts-Paris Tech, PUC-Rio, and CEPR)
    Abstract: Recent theories of the Long Divergence between Middle Eastern and Western European economies focus on Middle Eastern (over-)reliance on religious legitimacy, use of slave soldiers, and persistence of restrictive proscriptions of religious (Islamic) law. These theories take as exogenous the cultural values that complement the prevailing institutions. As a result, they miss the role of cultural values in either supporting the persistence of or inducing change in the economic and institutional environment. In this paper, we address these issues by modeling the joint evolution of institutions and culture. In doing so, we place the various hypotheses of economic divergence into one, unifying framework. We highlight the role that cultural transmission plays in reinforcing institutional evolution toward either theocratic or secular states. We extend the model to shed light on political decentralization and technological change in the two regions.
    Keywords: Long Divergence; cultural transmission; institutions; legitimacy; religion
    JEL: O10 P16 P48 N34 N35 Z12 O33
    Date: 2021
  2. By: Nancy Stokey (University of Chicago - Department of Economics)
    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
  3. By: Abbruzzese, Matteo; Infante, Davide; Smirnova, Janna
    Abstract: The paper investigates the environment-energy-growth relationship by exploring a panel data on 30 European economies for the period 1995-2015. We start by exploring traditional relation between environmental pollution expressed in green houses gases emissions as a whole (Kyoto Basket) as well as their three main components, carbon dioxide (CO2), dioxide of methane (CH4) and nitrous oxide (N2O), and per capita income extending the model by considering the role of renewable energy sources (RES). Our results, based on both fixed effects and instrumental variable methodology, demonstrate that traditional U-shape environment-growth relationship that holds for European countries is strongly influenced by the presence of RES through the shift of the turning point to higher per capita income levels. Moreover, the estimates show that with the increase of per capita consumption based on RES, environmental pollution tends to decrease in different measures, in according to the specific pollutant. As argued in the economic literature, the increase in consumption from renewable sources may generate a substitution effect, which mostly influences nuclear energy rather than fossil fuels, leading to increasing the income level of the turning point. Our results show that this increase could be due to the endogenous nature of income and to omitted variables distortion, thus revealing the true turning point. This would suggest that the process of energy transition, through the diffusion of low-emission energy sources, should accelerate to produce significant impact on pollution reduction.
    Keywords: Environmental Kuznets Curve; economic growth; Kyoto basket; energy renewable sources; European Countries
    JEL: O33 Q42 Q55 Q56
    Date: 2020–05–12
  4. By: Castañeda Garza, Diego
    Abstract: This paper employs archival data to reconstruct the historical pattern of primary energy consumption in Mexico during the 1880-2015 period. The study highlights the characteristics of the energy transitions between different primary energy sources and offers the first account of both traditional and modern energy carriers. It performs a trend and level analysis to explain how the economic structure, population and economic growth have impacted energy intensity and productivity. Thus, the paper provides a first approximation to the long-term relationship between economic growth and energy utilisation in Mexico. The period 1880- 1920 saw both growths in population and income increase energy consumption, the period 1921-1960 is mostly driven by income growth, 1961-2000, both growths in population and income drive consumption, and finally, between 2001 and 2015, population growth is the dominant force.
    Date: 2021–02–20
  5. By: Ufuk Akcigit (University of Chicago - Department of Economics; NBER; CEPR); Jeremy Pearce (University of Chicago - Department of Economics); Marta Prato (University of Chicago - Department of Economics)
    Abstract: How do innovation and education policy affect individual career choice and aggregate productivity? This paper analyzes the various layers that connect R&D subsidies and higher education policy to productivity growth. We put the development of scarce talent and career choice at the center of a new endogenous growth framework with individual-level heterogeneity in talent, frictions, and preferences. We link the model to micro-level data from Denmark and uncover a host of facts about the links between talent, higher education, and innovation. We use these facts to calibrate the model and study counter-factual policy exercises. We find that R&D subsidies, while less effective than standard models, can be strengthened when combined with higher education policy that alleviates financial frictions for talented youth. Education and innovation policies not only alleviate different frictions, but also impact innovation at different time horizons. Education policy is also more effective in societies with high income inequality.
    Keywords: R&D policy, education policy, inequality, innovation, iq, endogenous growth
    JEL: O31 O38 O47 J24
    Date: 2020
  6. By: Gregory Casey (Williams College); Marc Klemp (University of Copenhagen)
    Abstract: We provide a simple framework for interpreting instrumental variable regressions when there is a gap in time between the impact of the instrument and the measurement of the endogenous variable, highlighting a particular violation of the exclusion restriction that can arise in this setting. In the presence of this violation, conventional IV regressions do not consistently estimate a structural parameter of interest. Building on our framework, we develop a simple empirical method to estimate the long-run effect of the endogenous variable. We use our bias correction method to examine the role of institutions in economic development, following Acemoglu et al. (2001). We find long-run coefficients that are smaller than the coefficients from the original work, demonstrating the quantitative importance of our framework.
    Keywords: Long-Run Economic Development, Instrumental Variable Regression
    JEL: C10 C30 O10 O40
    Date: 2021–01–14
  7. By: Yunus Aksoy (Birkbeck, University of London); Gylfi Zoega (Birkbeck, University of London)
    Abstract: We study OECD countries that differ in immigration policies but share a high level of human capital. We find significant negative statistical relationship between 16 years lagged fertility and the rate of immigration in a panel of 23 countries, which indicates that immigration compensates for low fertility in the labor market
    Keywords: Fertility, replacement migration
    JEL: J13 J61
    Date: 2020–10
  8. By: Franco Frizzera; Martín Grandes
    Keywords: Economic Growth, Dominican Republic, Growth Accounting, ICT Capital, Total Factor Productivity.
    JEL: O47 O54 E22
    Date: 2020–12–18
  9. By: Edmunds Čižo (Daugavpils University); Olga Lavrinenko (Daugavpils University); Svetlana Ignatjeva (Daugavpils University)
    Abstract: To what extent does financial development determine economic growth? Despite the obvious relationship between the level of financial development and economic growth rates, there is still no consensus on the significance and focus of this relation. Is there a directed impact of the level of financial development on economic growth, or does the development of a financial sector follow economic growth? Or is the relation between financial development and economic growth bidirectional? The aim of the research is to analyze the causal relationship between quantitative and dynamic differences in financial development and economic growth in the EU countries in the period 1995-2017. The period of the research from 1995 to 2017 is determined by the availability of financial development indicators for the EU countries. In order to prove the directed impact of the level of financial development on economic growth in the EU countries in the period 1995-2017, the average values of growth in the financial development index with the lag forwarding by one year, with the lag falling behind by one year, without the lag, and average values of the GDP growth per capita were analyzed.
    Keywords: financial development,economic growth
    Date: 2020

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