nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒06‒28
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. Growth, War, and Pandemics: Europe in the Very Long-run By Prados de la Escosura, Leandro; Rodríguez-Caballero, Carlos Vladimir
  2. Long-Run Consequences of Population Decline in an Economy with Exhaustible Natural Resources By Kazuo Mino; Hiroaki Sasaki
  3. Positional Preferences and Efficiency in a Dynamic Economy By Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald
  4. Technological growth and hours in the long run: Theory and evidence By Reif, Magnus; Tesfaselassie, Mewael F.; Wolters, Maik H.
  5. Positional Preferences and Efficiency in a Dynamic Economy By Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald
  6. Induced Technical Change and Income Distribution: the Role of Public R&D and Labor Market Institutions By Zamparelli, Luca
  7. Is government debt good or bad for labor productivity? A dynamic panel analysis over 1972-2019 By Carvelli, Gianni; Trecroci, Carmine
  8. Happier and Sustainable. Possibilities for a post-growth society By Bartolini, Stefano; Sarracino, Francesco
  9. Growth, Endogenous Environmental Cycles, and Indeterminacy By Maxime MENUET; Alexandru MINEA; Patrick VILLIEU; Anastasios XEPAPADEAS

  1. By: Prados de la Escosura, Leandro; Rodríguez-Caballero, Carlos Vladimir
    Abstract: This paper contributes to the debate on the origins of modern economic growth in Europe from a very long-run perspective using econometric techniques that allow for a long-range dependence approach. Different regimes, defined by endogenously estimated structural shocks, coincided with episodes of pandemics and war. The most persistent shocks occurred at the time of the Black Death and the twentieth century's world wars. Our findings confirm that the Black Death often resulted in higher income levels, but reject the view of a uniform long-term response to the Plague while evidence a negative reaction in non-Malthusian economies. Positive trend growth in output per head and population took place in the North Sea Area (Britain and the Netherlands) since the Plague. A gap between the North Sea Area and the rest of Europe, the Little Divergence, emerged between the early seventeenth century and the Napoleonic Wars lending support to Broadberry-van Zanden's interpretation.
    Keywords: little divergence; Long-run Growth; Malthusian; Pandemics; war
    JEL: E01 N10 N30 N40 O10 O47
    Date: 2020–05
  2. By: Kazuo Mino (Institute of Economic Research, Kyoto University); Hiroaki Sasaki (Graduate School of Economics, Kyoto University)
    Abstract: This study explores how population decline affects the long-run performance of an economy in which exhaustible natural resources are indispensable in the process production. Using a one-sector neoclassical growth model with external increasing returns, we inspect the conditions under which the per capita income and consumption persistently expand in the long-run equilibrium. We fi nd that it is population decline, rather than exhaustible resources, that might terminate persistent growth in per capita income and consumption.
    Keywords: exhaustible natural resources, population decline, long-run growth, external increasing returns
    JEL: O13 O44 Q32 Q43
    Date: 2021–06
  3. By: Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald
    Abstract: Based on an endogenous growth model, this paper characterizes the conditions under which positional preferences do not give rise to intertemporal distortions as well as derives an optimal tax policy response in cases where these conditions are not satisfied. In our model, individuals can be positional both in terms of their consumption and wealth, the relative concerns partly reflect comparisons with people in other countries, and we distinguish between a (conventional) welfarist government and a paternalist government that does not respect positional preferences. We also extend the analysis to a multi-country framework and show that Nash-competition among local paternalist governments leads to a global social optimum, whereas Nash-competition among local welfarist governments does not.
    Keywords: Positional preferences, efficiency, intertemporal distortions, welfarist government, paternalist government, endogenous growth
    JEL: D62 E61 H11 O43
    Date: 2020–01–30
  4. By: Reif, Magnus; Tesfaselassie, Mewael F.; Wolters, Maik H.
    Abstract: Over the last decades, hours worked per capita have declined substantially in many OECD economies. Using the standard neoclassical growth model with endogenous work-leisure choice, we assess the role of trend growth slowdown in accounting for the decline in hours worked. In the model, a permanent reduction in technological growth decreases steady state hours worked by increasing the consumption-output ratio. Our empirical analysis exploits cross-country variation in the timing and the size of the decline in technological growth to show that technological growth has a highly significant positive effect on hours. A decline in the long-run trend of technological growth by one percentage point is associated with a decline in trend hours worked in the range of one to three percent. This result is robust to controlling for taxes, which have been found in previous studies to be an important determinant of hours. Our empirical finding is quantitatively in line with the one implied by a calibrated version of the model, though evidence for the model's implication that the effect on hours works via changes in the consumption-output ratio is rather mixed.
    Keywords: Productivity growth,technological growth,working hours,employment
    JEL: E24 O40
    Date: 2021
  5. By: Aronsson, Thomas; Ghosh, Sugata; Wendner, Ronald
    Abstract: In an endogenous growth model, we characterize the conditions under which positional preferences for consumption and wealth do not cause inefficiency and derive an optimal tax policy response in cases where these condi- tions are not satisfied. The concerns for relative consumption and relative wealth partly emanate from social comparisons with people in other coun- tries. We distinguish between a (conventional) welfarist government and a non-welfarist government that does not attach any social value to rela- tive concerns. We also compare the outcome of Nash-competition among local/national governments with the resource allocation implied by a global social optimum both under welfarism and non-welfarism.
    Keywords: Positional preferences, endogenous growth, wealth, intertemporal distor- tion, welfarism, non-welfarism, inter-country externalities, Pigouvian taxation
    JEL: D62 E61 H11 O43
    Date: 2021–04–03
  6. By: Zamparelli, Luca
    Abstract: This paper investigates the role of public R&D and labor market institutions in a labor constrained Classical growth model with induced technical change. It assumes that the innovation possibility frontier is a positive function of public R&D investment and a negative function of a measure of conflict in the labor market. It shows that while a larger size of the public sector and more peaceful industrial relations unequivocally boost long run growth, the effect on income distribution is not obvious. It depends on how the state of the labor market and public research affect the trade-off between labor and capital productivity growth, that is the slope of the innovation possibility frontier. While it appears plausible that a stronger workers' bargaining power may increase the wage share, higher public R&D investments will not affect income distribution unless it is biased toward either labor- or capital- saving innovations.
    Keywords: induced innovation, public R&D, labor market institutions
    JEL: D33 O31
    Date: 2021–06–23
  7. By: Carvelli, Gianni; Trecroci, Carmine
    Abstract: In this paper we provide new insights on the nexus between public debt and economic growth, focusing on the growth of debt rather than its level. By exploiting updated macroeconomic time series for 75 countries (37 OECD and 38 non-OECD) over the period 1972-2019 and using the system-GMM technique, we estimate the impact of the growth of public debt per worker on labor productivity growth. We find evidence of a significant adverse effect of the growth of public debt per worker on labor productivity growth, as proxied by the growth of output per worker. Similar results arise when we consider the growth of public debt per capita and the growth of real GDP per hours worked.
    Keywords: Public debt, Labor productivity, Growth.
    JEL: C33 E6 E62 H6 H63 O4 O47
    Date: 2021–06–16
  8. By: Bartolini, Stefano; Sarracino, Francesco
    Abstract: Empirical evidence suggests that achieving sustainability requires reducing economic growth, not just greening it. This conclusion often leads to ecological pessimism, based on two beliefs. The first is that there is a human tendency to unlimited expansion; the second is that lack of consensus makes limiting growth politically unfeasible. We challenge both beliefs. The decline of fertility and per-capita income growth provide reasons to expect decreasing human pressure on ecosystems. Moreover, the lack of a clear alternative to growth as a means to increase well-being creates the widespread perception of a trade-off between sustainability and current well-being. This hinders the consensus to the policy of limits to growth. Drawing on a large literature on happiness, social capital and other topics, we argue that policies for social capital can decouple well-being from economic growth. Indeed, the crisis of social capital experienced by much of the world's population is at the origin of the current unsustainable growth of the world economy. Declining social capital leads the economies to excessive growth, because people seek economic affluence to compensate for the emotional distress and collective disempowerment caused by poor social capital. We then suggest policies that, by promoting social capital, would expand well-being, and shift the economy to a more sustainable path characterized by slower economic growth. Such set of proposals is more politically viable than the current agenda of limits to growth and reconcile sustainability and well-being.
    Keywords: sustainability; social relations; subjective well-being; economic growth.
    JEL: I31 J1 O1 Q56
    Date: 2021–06–15
  9. By: Maxime MENUET; Alexandru MINEA; Patrick VILLIEU; Anastasios XEPAPADEAS
    Keywords: , Growth, Environment, Pollution, Poverty Traps, Endogenous Cycles
    Date: 2021
  10. By: Asep Suryahadi; Arnita Rishanty; Robert Sparrow
    Abstract: The role of social capital in economic development has been a subject of interest to both academics and practitioners of development for several decades. However, studies on social capital in developing countries context is still rare. This study explores empirically the relationships between social capital and economic development at district level in Indonesia.We find that the effects of social capital on economic development are complex. Hence, we cannot simply say that social capital is either good or bad for development. The relationships differ across development indicators, the forms of social capital, and the categories within each form of social capital. Nevertheless, the most important finding of this study indicates that trust among people across different ethnic groups is the most important social capital for Indonesia. Higher trust among ethnic groups reduces poverty, increases income per capita, and increases consumption per capita of all segments of the population. Since Indonesia hashighly diverse ethnic groups, maintaining trust among these ethnic groups is paramount to the success of economic development of the country.
    Keywords: social capital, economic development, trust, Indonesia
    JEL: C5 O1
    Date: 2020

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