nep-gro New Economics Papers
on Economic Growth
Issue of 2021‒08‒30
nine papers chosen by
Marc Klemp
University of Copenhagen

  1. Energy consumption, economic growth and pollution in Saudi Arabia By Mahmood, Haider; Alkhateeb, Tarek Tawfik Yousef; Al-Qahtani, Maleeha Mohammed Zaaf; Allam, Zafrul Allam; Ahmad, Nawaz; Furqan, Maham
  2. The Cross of Gold: Brazilian Treasure and the Decline of Portugal By Kedrosky, Davis; Palma, Nuno
  3. Growth at Risk From Climate Change By Michael T. Kiley
  4. Conjectures of English and UK Economic Surplus, Investment, Tax Revenues and Deficit Amounts from the 13th to the 19th Century By Lambert, Thomas
  5. Slave Trades, Kinship Structures and Women Political Participation in Africa By Leone Walters; Carolyn Chisadza; Matthew Clance
  6. (Successful) Democracies Breed Their Own Support By Daron Acemoglu; Nicolás Ajzenman; Cevat Giray Aksoy; Martin Fiszbein; Carlos A. Molina
  7. The Use of Quantile Methods in Economic History By Clarke, Damian; Llorca-Jaña, Manuel; Pailañir, Daniel
  8. Innovation Strategy and Economic Development By Matias Braun; Luis Felipe Cespedes; Sebastian Bustos
  9. The Neoclassical Model and the Welfare Costs of Selection By Fabrice Collard; Omar Licandro

  1. By: Mahmood, Haider; Alkhateeb, Tarek Tawfik Yousef; Al-Qahtani, Maleeha Mohammed Zaaf; Allam, Zafrul Allam; Ahmad, Nawaz; Furqan, Maham
    Abstract: Economic growth is very basic need of any economy but its environmental effects should not be ignored. We investigate the environmental effects of economic growth and energy consumption of Saudi Arabia. The study uses data of a period 1968-2014 and cointegration test and corroborates a long- and short-run relationships. The results indicate that economic growth and energy consumption contributes in CO2 emissions in both long- and short-run. It means that increasing economic growth of the Kingdom has social cost on the economy in terms of pollution emissions. Based on findings, we recommend to use the alternative renewable sources of energy consumption to avoid the pollution effects of growth in Saudi Arabia.
    Keywords: Energy Consumption, Economic Growth, Pollution
    JEL: Q53
    Date: 2019–11–09
  2. By: Kedrosky, Davis; Palma, Nuno
    Abstract: As late as 1750, Portugal had an output per head considerably higher than those of France or Spain. Yet just a century later, Portugal was Western Europe’s poorest country. In this paper we show that the discovery of massive quantities of gold in Brazil over the eighteenth century played a key role for the long-run development of Portugal’s economy. We focus on the economic resource curse: the loss of competitiveness of the tradables sector manifested in the rise of the price of non-traded goods relative to traded imports. Using original price data from archives for four Portuguese regions between 1650 and 1800, we show that a real exchange rate appreciation of about 30 percent occurred during the eighteenth century, which led to a loss of the competitiveness of national industry from which the country did not recover until considerably later.
    Keywords: Dutch Disease; resource curse; early modern Portugal; the Little Divergence JEL Classification: N10, N13, N50, N53, N73
    Date: 2021
  3. By: Michael T. Kiley
    Abstract: How will climate change affect risks to economic activity? Research on climate impacts has tended to focus on effects on the average level of economic growth. I examine whether climate change may make severe contractions in economic activity more likely using quantile regressions linking growth to temperature. The effects of temperature on downside risks to economic growth are large and robust across specifications. These results suggest the growth at risk from climate change is large—climate change may make economic contractions more likely and severe and thereby significantly impact economic and financial stability and welfare.
    Keywords: Climate change; Risk management; GDP at Risk
    JEL: E23 O13 Q54 Q56
    Date: 2021–08–09
  4. By: Lambert, Thomas
    Abstract: This paper attempts to estimate trends in the levels of economic surplus, public and private investment, and national government surpluses and deficits from accumulated capital income, taxation, and rents estimated by different economic historians for England and the UK. The data support historical accounts that income per capita growth begins to increase around the 1600s in Britain perhaps due to the level of capital, tax, and land income achieving an adequate threshold amount. According to some historians, this would also be about the time of capitalism’s ascent as the dominant economic system in England. Even then, dramatic increases in investment and economic growth do not appear until the late 18th Century when investment and deficits reach even higher levels. The data developed in this research note are offered as additional macroeconomic data supplements to works created by other authors and researchers.
    Keywords: Economic Surplus, Deficits, Investments, Private Investment, Public Investment, Tax Revenues,
    JEL: B50 C82 N13 O11 O52
    Date: 2021–08–06
  5. By: Leone Walters (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Carolyn Chisadza (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Matthew Clance (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa)
    Abstract: We study whether present-day women political participation in sub-Saharan Africa can be linked to the temporary gender ratio imbalances caused by the transatlantic and Indian Ocean slave trades, taking into account pre-existing gender norms influenced by kinship structures. Using individual-level data for 29 sub-Saharan African countries from the latest Afrobarometer surveys, ethnic region kinship and slave trade data, we find that a woman's ethnic region exposure to the transatlantic slave trade is associated with an increase in her likelihood to vote, however, only in non-patrilineal ethnic regions. This effect is mitigated in patrilineal ethnic regions, where women have less decision-making power. This paper contributes to the literature on the contemporary sub-national effects of the slave trades and the historical causes of gender gaps in political participation.
    Keywords: Slave Trade, Gender, Africa
  6. By: Daron Acemoglu; Nicolás Ajzenman; Cevat Giray Aksoy; Martin Fiszbein; Carlos A. Molina
    Abstract: Using large-scale survey data covering more than 110 countries and exploiting within-country variation across cohorts and surveys, we show that individuals with longer exposure to democracy display stronger support for democratic institutions. We bolster these baseline findings using an instrumental-variables strategy exploiting regional democratization waves and focusing on immigrants’ exposure to democracy before migration. In all cases, the timing and nature of the effects are consistent with a causal interpretation. We also establish that democracies breed their own support only when they are successful: all of the effects we estimate work through exposure to democracies that are successful in providing economic growth, peace and political stability, and public goods.
    JEL: P16
    Date: 2021–08
  7. By: Clarke, Damian (University of Chile); Llorca-Jaña, Manuel (Universidad de Valparaíso); Pailañir, Daniel (University of Chile)
    Abstract: Quantile regression and quantile treatment effect methods are powerful econometric tools for considering economic impacts of events or variables of interest beyond the mean. The use of quantile methods allows for an examination of impacts of some independent variable over the entire distribution of continuous dependent variables. Measurement in many quantative settings in economic history have as a key input continuous outcome variables of interest. Among many other cases, human height and demographics, economic growth, earnings and wages, and crop production are generally recorded as continuous measures, and are collected and studied by economic historians. In this paper we describe and discuss the broad utility of quantile regression for use in research in economic history, review recent quantitive literature in the field, and provide an illustrative example of the use of these methods based on 20,000 records of human height measured across 50-plus years in the 19th and 20th centuries. We suggest that there is considerably more room in the literature on economic history to convincingly and productively apply quantile regression methods.
    Keywords: quantile regression, quantile treatment effects, economic history, practitioners
    JEL: N30 B41 C21 C22
    Date: 2021–08
  8. By: Matias Braun; Luis Felipe Cespedes; Sebastian Bustos
    Abstract: Productivity differentials have been documented as the main determinant of the variation of income per capita across countries. In this paper, we investigate whether the implementation of innovation-intensive or adoption-intensive business strategies by firms can explain differences in productivity levels and productivity growth across industries and countries. We compute a novel innovation-intensity strategy index for firms, based on textual analysis of financial reports issued in the US by firms from developed and developing countries and from a wide range of industries. We show that the index captures dimensions of the innovation process implemented by firms that go beyond R&D efforts. Our empirical results indicate that firms that pursue an innovation-based strategy exhibit higher productivity levels compared to firms that follow an adoption-based strategy. Nonetheless, the optimal business strategy depends on the distance to the world technology frontier. Firms far from the frontier grow faster when implementing an adoption-based strategy, but an innovation-based strategy better suits firms closer to the technological frontier. We provide evidence indicating that a country’s financial market sophistication, competition policy and innovation capabilities –such as educational level, availability of scientists and engineers, and intellectual property protection– are key determinants of the strategy implemented by firms. The empirical evidence suggests that middle-income traps may occur if competition policy, innovation capabilities and financial market sophistication are not enhanced as a country moves closer to the technology frontier.
    Date: 2021–08
  9. By: Fabrice Collard; Omar Licandro
    Abstract: This paper embeds firm dynamics into the Neoclassical model and provides a simple framework to solve for the transitional dynamics of economies moving towards more selection. As in the Neoclassical model, markets are perfectly competitive, there is only one good and two production factors (capital and labor). At equilibrium, aggregate technology is Neoclassical, but the average quality of capital and the depreciation rate are both endogenous and positively related to selection. At steady state, output per capita and welfare both raise with selection. However, the selection process generates transitional welfare losses that may reduce in around 60% long term (consumption equivalent) welfare gains. The same property is shown to be true in a standard general equilibrium model with entry and fixed production costs.
    Keywords: firm dynamics and selection, neoclassical model, capital irreversibility, investment distortions, transitional dynamics, welfare gains
    JEL: E13 E23 D60 O40
    Date: 2021

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