nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒03‒21
twelve papers chosen by
Marc Klemp
University of Copenhagen

  1. The Shadow of the Neolithic Revolution on Life Expectancy: A Double-Edged Sword By Oded Galor; Omer Moav; Ömer Özak
  2. Forbidden Fruits: The Political Economy of Science, Religion, and Growth By Roland Roland Bénabou; Davide Ticchi; Andrea Vindigni
  3. Understanding Climate Damages: Consumption versus Investment By Gregory Casey; Stephie Fried; Matthew Gibson
  4. Endogenous Education and Long-Run Factor Shares By Gene M. Grossman; Elhanan Helpman; Ezra Oberfield; Thomas Sampson
  5. The Rise of the Engineer: Inventing the Professional Inventor During the Industrial Revolution By W. Walker Hanlon
  6. Do corporate tax cuts boost economic growth? By Sebastian Gechert; Philipp Heimberger
  7. The contribution of robots to productivity growth in 30 OECD countries over 1975–2019 By Gilbert Cette; Aurélien Devillard; Vincenzo Spiezia
  8. Financial Market Inclusion and Economic Growth: Evidence from Algeria By CHIAD, Faycal; Aouissi, Amine; Lahsasna, Ahcene
  9. Is Fiscal Austerity Really Self-Defeating? By Piergallini, Alessandro
  10. Does gender inequality affect economic development? An evidence based on analysis of cross-national panel data of 158 countries By Ram, Harchand; Chakravorty, Swastika; Goli, Srinivas
  11. Heterogeneous Paths of Industrialization By Federico Huneeus; Richard Rogerson
  12. Growth in an OLG Economy with Polluting Non-Renewable Resources By Nicolas Clootens

  1. By: Oded Galor (Brown University); Omer Moav (University of Warwick); Ömer Özak (Southern Methodist University)
    Abstract: This research explores the persistent effect of the Neolithic Revolution on the evolution of life expectancy in the course of human history. It advances the hypothesis and establishes empirically that the onset of the Neolithic Revolution and the associated rise in infectious diseases triggered a process of adaptation reducing mortality from infectious diseases while increasing the propensity for autoimmune and inflammatory diseases. Exploiting an exogenous source of variation in the timing of the Neolithic Revolution across French regions, the analysis establishes the presence of these conflicting forces - the beneficial effects on life expectancy before the second epidemiological transition and their adverse effects thereafter.
    Keywords: Life Expectancy, Health, Mortality, Neolithic Revolution, Epidemiological Transition, Infectious Disease, Auto-immune Disease, Diabetes, Crohn's Disease, HIV, COVID-19
    JEL: I10 I15 J10 N00 N30 O10 O33 Z10
    Date: 2022–03
  2. By: Roland Roland Bénabou (Princeton University); Davide Ticchi (Marche Polytechnic University); Andrea Vindigni (University of Genova)
    Abstract: We study the coevolution of religion, science and politics. We first uncover, in international and U.S. data, a robust negative relationship between religiosity and patents per capita. The model then combines: (i) scientific discoveries that raise productivity but sometimes erode religious beliefs; (ii) a government that allows innovations to diffuse, or blocks them; (iii) religious institutions that can invest in doctrinal reform. Three long-term outcomes emerge. The Western-European Secularization regime has declining religiosity, unimpeded science, and high taxes and transfers. The Theocratic regime involves knowledge stagnation, unquestioned dogma, and high religious-public-goods spending. The American regime combines scientific progress and stable religiosity through doctrinal adaptations, with low taxes and some fiscal-legal advantages for religious activities. Rising income inequality can, however, empower a Religious-Right alliance that starts blocking belief-eroding ideas.
    Keywords: science, discovery, innovation, progress, knowledge, religion, secularization, tolerance, religious right, theocracy, politics, populism, denialism, inequality, redistribution
    JEL: E02 H11 H41 O3 O43 P16 Z12
    Date: 2020–07
  3. By: Gregory Casey (Williams College); Stephie Fried (Arizona State University); Matthew Gibson (Williams College)
    Abstract: Existing climate-economy models use aggregate damage functions to model the effects of climate change. This approach assumes climate change has equal impacts on the productivity of firms that produce consumption and investment goods or services. We show the split between damage to consumption and investment productivity matters for the dynamic consequences of climate change. Drawing on the structural transformation literature, we develop a framework that incorporates heterogeneous climate damages. When investment is more vulnerable to climate, we find short-run consumption losses will be smaller than leading models with aggregate damage functions suggest, but long-run consumption losses will be larger. We quantify these effects for the climate damage from heat stress and find that accounting for heterogeneous damages increases the welfare cost of climate change by approximately 4 to 24 percent, depending on the discount factor.
    Keywords: Climate Change, Structural Transformation, Growth
    JEL: O13 O44 Q56
    Date: 2022–01–03
  4. By: Gene M. Grossman (Princeton University); Elhanan Helpman (Harvard University); Ezra Oberfield (Princeton University); Thomas Sampson (London School of Economics)
    Abstract: We study the determinants of factor shares in a neoclassical environment with capital skill complementarity and endogenous education. When more physical capital raises the marginal product of skills relative to that of raw labor, an increase in a broad measure of embodied human capital raises the capital share in national income for any given rental rate. When education is chosen optimally, a dynamic equilibrium is characterized by an inverse relationship between the level of human capital and both the rental rate on capital and the difference between the interest rate and the growth rate of wages. As a consequence, estimates of the elasticity of substitution that fail to account for levels of human capital will be biased upward. We develop a model with overlapping generations, ongoing increases in educational attainment, and technology-driven neoclassical growth, and show that for a class of production functions with capital-skill complementarity, a balanced growth path exists and is characterized by an inverse relationship between the rates of capital- and labor-augmenting technological progress and the capital share in national income.
    Keywords: neoclassical growth, balanced growth, human capital, education, technological progress, capital-skill complementarity, labor share, capital share
    JEL: D33 E25 J24 O33
    Date: 2020–09
  5. By: W. Walker Hanlon
    Abstract: Why was the Industrial Revolution successful at generating sustained growth? Some have argued that there was a fundamental change in the way that new technology was developed during this period, but evidence for this argument remains largely anecdotal. This paper provides direct quantitative evidence showing that how innovation and design work was done changed fundamentally during the Industrial Revolution. This change was characterized by the professionalization of innovation and design work through the emergence of the engineering profession. I also propose a theory describing how this change could have acted as one mechanism behind the transition to modern economic growth.
    JEL: N13 N73 O3
    Date: 2022–02
  6. By: Sebastian Gechert (Macroeconomic Policy Institute (IMK)); Philipp Heimberger (Vienna Institute for International Economic Studies (wiiw))
    Abstract: The empirical literature on the impact of corporate taxes on economic growth reaches ambiguous conclusions: corporate tax cuts increase, reduce, or do not significantly affect growth. We apply meta-regression methods to a novel dataset with 441 estimates from 42 primary studies. There is evidence for publication selectivity in favour of reporting growth-enhancing effects of corporate tax cuts. Correcting for this bias, we cannot reject the hypothesis of a zero effect of corporate taxes on growth. Several factors influence reported estimates, including researcher choices concerning the measurement of growth and corporate taxes, and controlling for other budgetary components.
    Keywords: Corporate income taxes; economic growth; meta-analysis
    JEL: E60 H25 O40
    Date: 2021
  7. By: Gilbert Cette (Banque de France - Banque de France - Banque de France); Aurélien Devillard (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Vincenzo Spiezia (OECD - The Organisation for Economic Coopération and Development)
    Abstract: Using a new and original database, our paper contributes to the growth accounting literature by singling out the contribution of robots through two channels: capital deepening and TFP. The contribution of robots to productivity growth through capital deepening and TFP appears to have been significant in Germany and Japan in the sub-period 1975–1995 and in several Eastern European countries in 2005–2019. However, robotization does not appear to be the source of a significant revival in productivity.
    Keywords: growth,productivity,robots
    Date: 2021–03
  8. By: CHIAD, Faycal; Aouissi, Amine; Lahsasna, Ahcene
    Abstract: In this paper, we investigated the relationship between financial inclusion (FI), trade openness (TO), human development (HD), and GDP growth in Algeria. Our data set covers annual times series data from 1980 to 2018. The autoregressive distributed lag (ARDL) bounds test was used to examine the cointegration between variables due to mixed orders of integration I(0) and I(1).The results indicate that financial inclusion, trade openness, human development have a positive and significant impact on economic growth in the short and long-run, thereby confirming the strength of the finance-growth connections. Granger-causality test confirms that there is bi-directional causality between financial inclusion and economic growth.
    Keywords: Financial inclusion, Economic Growth, ARDL, Algeria
    JEL: O10
    Date: 2021
  9. By: Piergallini, Alessandro
    Abstract: This paper analyzes local and global equilibrium dynamics in an optimizing endogenous growth model under expenditure-based fiscal austerity feedback policies expressed relative to the private capital stock — prescribing spending cuts in reaction to public debt accumulation. Because the present value of equilibrium primary surpluses turns to be a nonlinear function of debt, two steady state equilibria are shown to emerge, one exhibiting low debt and high growth, one exhibiting high debt and low growth. Local analysis reveals that the low-debt/high-growth steady state is saddle-path stable while the high-debt/low-growth steady state is unstable — the latter thus indicating the possibility of self-defeating austerity, characterized by off-equilibrium upward spirals in debt because of persistent policy-induced adverse effects on growth dividends and fiscal revenues. However, when global nonlinear dynamics are taken into account, it is demonstrated that the two steady states are endogenously connected. In particular, global analysis reveals that even if the high-debt/low-growth steady state is locally unstable, there exists a unique and possibly non-monotonic saddle connection making the economy converge to the low-debt/high-growth steady state. The existence of the saddle connection guarantees global determinacy of perfect foresight equilibrium should the high-debt/low-growth steady state be a node, ruling out multiple explosive paths incompatible with the government's intertemporal budget constraint and the private agents' transversality condition. The foregoing results are robust with respect to the adoption of an output-based — rather than a capital-based — policy function as long as the rule is nonlinear and sufficiently reactive to debt changes.
    Keywords: Fiscal Austerity; Feedback Policy Rules; Endogenous Growth; Multiple Equilibria; Local Dynamics; Global Dynamics.
    JEL: C62 E62 H63 O40
    Date: 2020–11–14
  10. By: Ram, Harchand; Chakravorty, Swastika; Goli, Srinivas
    Abstract: The gender-inequality is a critical economic challenge that has a significant negative impact on global economic prospects. In this context, this study aims to investigate the association between gender inequality and growth outcomes in the form of gross domestic product (GDP hereafter) per-capita across 158 countries in the world during 2000-15. Our findings suggest that GII has a significant inverse correlation with GDP per-capita (r=-0.7886); While gender development index (GDI hereafter) shows a positive correlation with GDP per-capita (r=0.574). Results from the multivariate log-linear model show that country with a high level of gender inequality index (GII hereafter) is having significantly lower levels of GDP per-capita even after controlling for other covariates. This study evidentially suggests that the economic policy of the countries should prioritize autonomy, agency, and empowerment of women to improve their participation in the national economy. Unless countries reduce gender inequalities, achieving full economic potential is not possible.
    Date: 2022–02–08
  11. By: Federico Huneeus (Yale University); Richard Rogerson (Princeton University)
    Abstract: Industrialization experiences differ significantly across countries. We use a bench-mark model of structural change to shed light on the sources of this heterogeneity and, in particular, the phenomenon of premature deindustrialization. Our analysis leads to three key findings. First, benchmark models of structural change robustly generate hump-shaped patterns for the evolution of the manufacturing sector. Second, heterogeneous patterns of catch-up in sectoral productivities across countries can generate variation in industrialization experiences similar to those found in the data, including premature deindustrialization. Third, differences in the rate of agricultural productivity growth across economies can account for a large share of the variation in peak manufacturing employment shares.
    Keywords: Structural transformation, Productivity growth, Industrialization
    JEL: E24 O11
    Date: 2020–07
  12. By: Nicolas Clootens (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper analyses the effects of flow pollution implied by the use of necessary non-renewable resources, fossil fuel for example, on overlapping generations (OLG) economies. Notably, it shows that, on the balanced growth path, flow pollution reduces the (negative) resources contribution to growth and increases resources conservation, capital accumulation, and growth. Flow pollution thus increases the ability of an economy to sustain a non-decreasing consumption path. Some of the results are due to (or magnified by) the OLG structure of the economy. In addition, the paper highlights the need for public intervention and shows that the optimal allocation may be decentralized using a tax on resources use and transfers.
    Keywords: Non-renewable Resources,Growth,Pollution,Overlapping Generations
    Date: 2021–03

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