nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒01‒10
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. Technologies for Endogenous Growth By Federico Etro
  2. Dynamic Effects of Tourism Shocks on Innovation in an Open-Economy Schumpeterian Growth Model By Chu, Angus C.; Liao, Chih-Hsing; Chen, Ping-ho; Xu, Rongxin
  3. Development loans, poverty trap, and economic dynamics By Le Van, Cuong; Pham, Ngoc-Sang; Pham, Thi Kim Cuong
  4. Customers and Retail Growth By Liran Einav; Peter J. Klenow; Jonathan D. Levin; Raviv Murciano-Goroff
  5. Growth and Inflation in Turkey By Alkan, Berkay
  6. Comparative European institutions and the Little Divergence, 1385-1800 By Henriques, Antonio; Palma, Nuno
  7. Social Organization and the Roots of Supernatural Beliefs By Araújo, Daniel; Carrillo, Bladimir; Sampaio, Breno
  8. Infrastructure development and population growth on economic growth in South Africa By Stungwa, Sanele; Daw, Olebogeng David
  9. The Impact of the Spatial Population Distribution on Economic Growth By Burgi, Constantin; Gorgulu, Nisan
  10. Growth theory and the growth model perspective: Insights from the supermultiplier By Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni

  1. By: Federico Etro
    Abstract: I microfound endogenous growth through neoclassical technologies with substitutable inputs created by monopolistically competitive innovators. Investment delivers innovations of declining profitability, but increasing labor force generates growth depending on structural technological parameters that determine the elasticities of profits and output relative to the mass of inputs. With a Cobb-Douglas technology in labor and a CES aggregator of inputs growth declines with the substitutability between inputs, with a nested CES technology growth vanishes as long as the substitutability between labor and inputs is less than unitary, and with a Diewert technology growth is sustainable for a high share of inputs in production.
    Keywords: Long-run growth, Semi-endogenous growth, input substitutability, population, technology.
    JEL: O3 O4
    Date: 2021
  2. By: Chu, Angus C.; Liao, Chih-Hsing; Chen, Ping-ho; Xu, Rongxin
    Abstract: This study explores the dynamic effects of tourism shocks in an open-economy Schumpeterian growth model with endogenous market structure. A tourism shock affects the economy via a reallocation effect and an employment effect. A positive tourism shock increases employment, which raises the level of production and the growth rate of domestic output in the short run. However, a positive tourism shock also reallocates labor from production to service for tourists, which reduces production and growth in domestic output. Which effect dominates depends on leisure preference. If leisure preference is weak, the reallocation effect dominates, and the short-run effect of positive tourism shocks is monotonically negative. If leisure preference is strong, the employment effect dominates initially, and the short-run effect of tourism shocks becomes inverted-U. We use cross-country data to provide evidence for this inverted-U relationship. Finally, permanent tourism shocks do not affect long-run economic growth in our scale-invariant model.
    Keywords: tourism shocks; innovation; endogenous market structure
    JEL: O3 O4 Z0
    Date: 2021–12
  3. By: Le Van, Cuong; Pham, Ngoc-Sang; Pham, Thi Kim Cuong
    Abstract: This paper investigates the nexus between foreign aid (in the form of loans), poverty trap, and economic development in a recipient country by using a Solow model with two new ingredients: a development loan and a fixed cost in the production process. The presence of this fixed cost generates a poverty trap. Development loans may help the country to escape from the poverty trap and converge to a stable steady-state in the long run, but only if (i) the country's characteristics, such as saving rate, initial capital, governance quality, and in particular productivity, are good enough, (ii) the fixed cost is relatively low, and (iii) loans rule is generous enough. We also show that there is room for endogenous cycles in our model, unlike the standard Solow model.
    Keywords: Economic dynamics, economic growth, foreign aid, development loan, poverty trap
    JEL: O1 O11 O19 O4 O41
    Date: 2021–11–30
  4. By: Liran Einav; Peter J. Klenow; Jonathan D. Levin; Raviv Murciano-Goroff
    Abstract: Using Visa debit and credit card transactions in the U.S. from 2016 to 2019, we document the importance of customers in accounting for sales variation across merchants, across stores within retail chains, and over time for individual merchants and stores. Customers, as opposed to transactions per customer or dollar sales per transaction, consistently account for about 80% of sales variation. The top 1% of growing and shrinking merchants account for about 70% of customer and sales reallocation in a given year. In order to illustrate some of the potential implications, we write down an endogenous growth model with and without the customer margin. In the context of this model, we find that the customer margin dramatically increases the size and growth contribution of the largest firms, but lowers the aggregate growth rate by diverting resources from research to customer acquisition activities.
    JEL: E21 L81 O4
    Date: 2021–12
  5. By: Alkan, Berkay
    Abstract: In this paper I investigate the empirical relationship between economic growth (as measured by growth in real GDP) and inflation in Turkey. We use a relatively large dataset spanning from 1960 to 2020. Our correlation analysis indicates that the nature of the relationship between inflation and unemployment in Turkey is substantially different before and after early 1980s.
    Keywords: growth; inflation; Turkish economy
    JEL: E31 N10 O40
    Date: 2021–12–25
  6. By: Henriques, Antonio (Universidade do Porto); Palma, Nuno (University of Manchester; Instituto de Ciencias Sociais, Universidade de Lisboa; CEPR)
    Abstract: Why did the countries that first benefited from access to the New World – Castile and Portugal – decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of the Atlantic trade explain the Iberian divergence. In this paper, we build a new dataset which allows for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest rates and spreads for public debt. We find no evidence that the political institutions of Portugal and Spain were worse until the English Civil War.
    Keywords: Atlantic Traders, New Institutional Economics, the Little Divergence JEL Classification: N13, N23, O10, P14, P16
    Date: 2021
  7. By: Araújo, Daniel (Universidade Federal de Pernambuco); Carrillo, Bladimir (Universidade Federal de Pernambuco); Sampaio, Breno (Universidade Federal de Pernambuco)
    Abstract: Religion and beliefs in the supernatural are present in all societies. Yet, studies about the economic roots of small-scale supernatural belief systems remain quite limited. In this work, we test the anthropological hypothesis that historical dependence on pastoralism favored the adoption of customs that contributed to the reduction in witchcraft beliefs. Pastoral societies were characterized by the use of social strategies as a way of mitigating the risks inherent in pastoral production, making the practice of accusations of witchcraft a barrier to maintaining their existing social ties. Consistent with this hypothesis, we document that people descending from historically more pastoral societies have a lower level of contemporary belief in witches. The results using an instrumental variable based on the ecological determinants of pastoralism corroborates our main analysis. We further show that the main mechanism behind our result seems to be pastoralist groups' freedom of movement and an increase in social ties, proxied by the level of trust in relatives, neighbors, courts, and local councils. We also show that the reduced belief in witches increases references to witchcraft in pastoral societies' oral traditions, narratives, stories, jokes, and proverbs, possibly because the lack of fear makes pastoralists more willing to speak, sing and joke about the supernatural. Finally, we test for the importance of cultural persistence by examining people who live today in locations with low levels of suitability for pastoralism but belong to ethnic groups that have historically lived in areas with high levels of suitability and show that the reduction in belief in witches persists.
    Keywords: culture, pastoralism, persistence, superstition, witchcraft
    JEL: O10 Z10 Z13 Z19
    Date: 2021–12
  8. By: Stungwa, Sanele; Daw, Olebogeng David
    Abstract: The objective of this study is to examine the correlation between infrastructure development and population growth on economic growth in South Africa. The study employed Cross-section Seemingly Unrelated regression to analyze the relationship between infrastructure development and population growth on economic growth using an annual panel data collected from nine provinces for the period 2006-2019. The results showed that infrastructure is not an effective instrument to stimulate economic growth. Provincial government expenditure was found to have a positive and significant relationship with economic growth. The study found that unemployment and economic growth have a negative and significant relationship. Moreover, the results revealed that population has a positive and statistical impact on economic growth. The granger causality test found that there is a causality running from population growth to infrastructure unidirectionally, meaning that population growth has an impact on infrastructure development in South Africa. To correct the problem of having harmful infrastructure on economic growth, South African policy makers should ensure that there is no lack of clarity about national objectives and standards and lack of coordination in the development of natural instruments and inconsistent implementation of national objectives. There is a need to invest more on infrastructure in South Africa.
    Keywords: Infrastructure, Population, Economic growth, Cross-section Seemingly Unrelated Regression South Africa
    JEL: C1 H54 H76 O18
    Date: 2021–10–10
  9. By: Burgi, Constantin (University College Dublin, School of Economics); Gorgulu, Nisan (Department of Economics, Copenhagen Business School)
    Abstract: We look at the spatial angle of economic growth. Specifically, we assess whether areas where people live closer together experience faster growth. Traditional measures like population density or urbanization are not optimal, as they are affected by large uninhabited areas or capped, respectively. We thus introduce a new measure Spatial Population Concentration (SPC) that captures how many people live on average within a given radius of every person within a geographic area. This measure allows for a more accurate measurement of the population concentration than traditional measures, as it does not share some of their short comings. Next, we show for U.S. counties that areas with a high spatial population concentration experience faster growth. We find that counties with a low value of SPC measure in 1990 experienced substantially lower GDP growth over the next 25 years.
    Keywords: spatial population concentration; endogeneous growth; spillover; the United States
    JEL: O47 O51 R12
    Date: 2021–11–19
  10. By: Guilherme Spinato Morlin; Nikolas Passos; Riccardo Pariboni
    Abstract: Recently, demand-led growth theories reshaped the study of comparative political economy. Since the Baccaro and Pontusson critique of Varieties of Capitalism, a new wave of studies has sought to analyze national economies in terms of their main demand driver of growth. Post-Keynesian authors provided extensions to perfect the fit between demand-led growth theories and comparative political economy. We argue that the Sraffian supermultiplier provides a growth theory compatible with the growth model perspective advanced by Baccaro and Pontusson and has advantages over Kaleckian and New Keynesian approaches. The concept of the autonomous components of demand, which comprise government spending, export, and debt-financed consumption, is already central for the studies of growth models. The supermultiplier provides a theory that coherently understands the relation between the autonomous demand drivers and the other induced components of demand. We demonstrate our arguments by decomposing the growth of four advanced economies: the United States, Germany, Japan, and Sweden. The decomposition shows the importance of separating the autonomous from the induced components and highlights the relevance of public expenditures and exports as growth drivers in advanced economies.
    Keywords: Comparative Political Economy, growth models, Sraffian supermultiplier
    JEL: B52 E12 O47 O57 P52
    Date: 2021–12

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