nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒05‒02
thirteen papers chosen by
Marc Klemp
University of Copenhagen

  1. The Shadow of the Neolithic Revolution on Life Expectancy: A Double-Edged Sword By Raphaël Franck; Oded Galor; Omer Moav; Ömer Özak
  2. Patents in the Long Run : Theory, History and Statistics By Claude Diebolt; Karine Pellier
  3. Climate Change and Economic Activity: Evidence from U.S. States By Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
  4. Revisiting the Great Ratios Hypothesis By Alexander Chudik; M. Hashem Pesaran; Ron P. Smith
  5. Colonial Origins and Fertility: Can the Market Overcome History? By David Canning; Marie Christelle Mabeu; Roland Pongou
  6. Productivity effects of trade in natural resources – comparison with mechanisms of technological specialisation. By Zuzanna Bazychowska; Aleksandra Parteka
  7. Economic inequality in preindustrial Germany, ca. 1300–1850 By Alfani, Guido; Gierok, Victoria; Schaff, Felix
  8. Pandemic shock and economic divergence: political economy before and after the black death By Bosshart, Luis; Dittmar, Jeremiah
  9. Air pollution and innovation By Bracht, Felix; Verhoeven, Dennis
  10. Hysteresis, endogenous growth, and monetary policy By Sebastián Amador
  11. Artificial intelligence and productivity: global evidence from AI patent and bibliometric data. By Aleksandra Parteka; Aleksandra Kordalska
  12. Was the British industrial revolution a conjuncture in global economic history? By O'Brien, Patrick
  13. A Note on Economic Growth and Labor Automation By Pang, Ziyun

  1. By: Raphaël Franck; Oded Galor; Omer Moav; Ömer Özak
    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, autoimmune disease, diabetes, Crohn’s Disease, HIV, COVID-19
    JEL: I10 I15 J10 N00 N30 O10 O33 Z10
    Date: 2022
  2. By: Claude Diebolt (BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Karine Pellier (BETA - Bureau d'Économie Théorique et Appliquée - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This paper examines the structural and spatial dynamics of patents in France, Germany, Japan, the United Kingdom and the United States. The time series are extracted from international, comparative and historical databases on the long-term evolution of patents in 40 countries from the 17th century to 1945 and in more than 150 countries from 1945 to present (Diebolt and Pellier 2010). We have found strong evidence of infrequent large shocks resulting essentially from the major economic and political events formed by the two World Wars in the 20th century. Our results question the autonomous process, i.e. the internal dynamic of the patent systems. Wars seem to drive innovation and, finally, the very process of economic growth. We further investigated the role of innovation in economic growth through a causality analysis between patents and GDP per capita. Our major findings support the assumption that the accumulation of innovations was a driving force only for France, the United Kingdom and the United States during the post-World War II period.
    Keywords: Comparisons in time and space,Outliers,Causality,Patents,Shock analysis,Cliometrics,Database
    Date: 2022–03–16
  3. By: Kamiar Mohaddes; Ryan N. C. Ng; M. Hashem Pesaran; Mehdi Raissi; Jui-Chung Yang
    Abstract: We investigate the long-term macroeconomic effects of climate change across 48 U.S. states over the period 1963.2016 using a novel econometric strategy which links deviations of temperature and precipitation (weather) from their long-term moving-average historical norms (climate) to various state-specific economic performance indicators at the aggregate and sectoral levels. We show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment in the United States. Moreover, in contrast to most cross-country results, our within U.S. estimates tend to be asymmetrical with respect to deviations of climate variables (including precipitation) from their historical norms.
    Keywords: climate change, economic growth, adaptation, United States
    JEL: C33 O40 O44 O51 Q51 Q54
    Date: 2022
  4. By: Alexander Chudik; M. Hashem Pesaran; Ron P. Smith
    Abstract: The idea that certain economic variables are roughly constant in the long-run is an old one. Kaldor described them as stylized facts, whereas Klein and Kosobud labelled them great ratios. While such ratios are widely adopted in theoretical models in economics as conditions for balanced growth, arbitrage or solvency, the empirical literature has tended to find little evidence for them. We argue that this outcome could be due to episodic failure of cointegration, possible two-way causality between the variables in the ratios, and cross-country error dependence due to latent factors. We propose a new system pooled mean group estimator (SPMG) to deal with these features. Using this new panel estimator and a dataset spanning almost one and half centuries and seventeen countries, we find support for five out of the seven great ratios that we consider. Extensive Monte Carlo experiments also show that the SPMG estimator with bootstrapped confidence intervals stands out as the only estimator with satisfactory small sample properties.
    Keywords: great ratios, debt, consumption, and investment to GDP ratios, arbitrage conditions, heterogeneous panels, episodic cointegration, two-way long-run causality, error cross-sectional dependence
    JEL: B40 C18 C33 C50
    Date: 2022
  5. By: David Canning; Marie Christelle Mabeu; Roland Pongou
    Abstract: Can market incentives overcome the long-term impact of historical institutions? We address this question by focusing on the role of colonial reproductive policies in shaping fertility behavior in Africa. Exploiting the arbitrary division of ancestral ethnic homelands and the resulting discontinuity in institutions across the British-French colonial borders, we find that women in former British areas are more likely to delay sexual debut and marriage, and have fewer children. However, these effects disappear in areas with high market access, where the opportunity cost of childbearing appears to be high irrespective of colonizer identity. This heterogeneous impact of colonial origins is robust across different measures of access to international and domestic markets. Examining causal mechanisms, we collect archival data on colonial reproductive laws and policies to conduct an event-study analysis. We find that the effect of colonial origins on fertility is entirely driven by differences in the timing of colonial population policies and their lasting impact on the use of modern methods of birth control. We find little evidence that the fertility effect of British colonization operates through education or income. While British colonization is linked to higher female education, this occurs mainly in areas with higher market access while the fertility effects do not. Again, while income levels differ, the fertility gap between British and French colonies opened prior to 1980, whereas the income gap only opened after 1990. Our analysis highlights the heterogeneous nature of the colonial origins of comparative fertility behavior, and implies that economic incentives may overcome historical determinism.
    Keywords: Fertility, Colonial Origins, Colonial Reproductive Laws and Policies, Market Access, Historical Determinism, Africa.
    Date: 2022
  6. By: Zuzanna Bazychowska (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland)
    Abstract: This paper compares two alternative growth paths, assessing the effects on productivity of specialisation in natural resources (NR) and in technologically advanced products. The empirical analysis exploits product-level export data for 109 developing and 51 developed economies over the period 1996-2018. We document two distinct types of specialisation, based on exports either of natural resources or of technological products, and compare their role in productivity growth by GMM estimation of a conditional convergence model. In general, reliance on natural resource exports slows growth, but we find that the type of resources exported is important: fuel exports hamper growth while specialisation in metals enhances the catch-up in productivity. Technological specialisation, especially in products typical of the Fourth Industrial Revolution, reinforces productivity growth but does not affect the relationship between resources and productivity growth.
    Keywords: natural resources, technological specialisation, productivity growth, convergence
    JEL: O13 O47 O3 Q32
    Date: 2022–04
  7. By: Alfani, Guido; Gierok, Victoria; Schaff, Felix
    Abstract: This article provides an overview of wealth inequality in Germany during 1300–1850, introducing a novel database. We document four alternating phases of inequality decline and growth. The Black Death (1347–1352) led to inequality decline, until about 1450. Thereafter, inequality rose steadily. The Thirty Years’ War (1618–1648) and the 1627–1629 plague triggered a second phase of inequality reduction. This distinguishes Germany from other European areas where inequality grew monotonically. Inequality growth resumed from about 1700, well before the Industrial Revolution. Our findings offer new material to current debates on the determinants of inequality change in western societies, past and present.
    Keywords: European Union’s Seventh Framework Programme (FP7/2007-2013)/ERC Grant agreement No. 283802; EINITE-Economic Inequality across Italy and Europe; 1300–1800; as well as under European Union’s Horizon 2020 Framework Program/ERC Grant agreement No. 725687; SMITE-Social Mobility and Inequality across Italy and Europe; 1300–180
    JEL: N33
    Date: 2022–03–18
  8. By: Bosshart, Luis; Dittmar, Jeremiah
    Abstract: We document how the Black Death activated politics and led to economic divergence within Europe. Before the pandemic, economic development was similar in Eastern and Western German cities despite greater political fragmentation in the West. The pandemic precipitated a divergence that coincided with prior differences in politics. After the pandemic, construction and manufacturing fell by 1/3 in the East relative to underlying trends and the Western path. Politics institutionalizing local self-government advanced in the West, but not in the East. This divergence is observed across otherwise similar cities along historic borders and foreshadows a subsequent divergence in agriculture.
    Keywords: institutions; political economy; structural change; cities; growth
    JEL: N13 N14 N60 N93 O10 O18 O40 P48
    Date: 2021–10–22
  9. By: Bracht, Felix; Verhoeven, Dennis
    Abstract: Existing estimates of the economic costs of air pollution do not account for its effect on inventive output. Using two weather phenomena as instruments, we estimate this effect in a sample of 1,288 European regions. A decrease in exposure to small particulate matter of 0.17µg/m3 - the average yearly reduction in Europe - leads to 1.7% more patented inventions. After ruling out reallocation of human capital, inventor mortality and R&D expenditures as drivers of the effect, we conclude that air pollution's harm to economic output increases by at least 10% when accounting for innovation.
    Keywords: air pollution; air quality; innovation; patent; productivity
    JEL: O30 Q53 O13
    Date: 2021–11–26
  10. By: Sebastián Amador (Department of Economics, University of California Davis)
    Abstract: I provide evidence of substantial hysteresis (i.e., a situation in which temporary shocks have long-run effects) from monetary shocks on two sources of endogenous growth; human capital and technological adoption. This contribution is the first to test for the presence of this phenomenon in direct measures of the supply-side potential of economies, instead of indirect measures, e.g., TFP. To estimate the effects of exogenous monetary policy shocks, I improve on the the trilemma identification by incorporating a mean-unbiased instrumental variable estimator. Results show substantial hysteresis in both human capital and technological adoption. Importantly, these are found to be asymmetric, as only contractionary shocks result in long lasting responses. I evaluate the aggregate importance of monetary hysteresis with a growth accounting exercise. Across the 17 countries in sample, the accumulated average cost of monetary hysteresis ranges between 1.2 and 9.6% of TFP, for human capital and the adoption of electricity, respectively.
    Keywords: hysteresis, money non-neutrality, endogenous growth
    JEL: E01 E30 E32 E44 E47 E51 F33 F42 F44
    Date: 2022–04–20
  11. By: Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Aleksandra Kordalska (Gdansk University of Technology, Gdansk, Poland)
    Abstract: In this paper we analyse the effects of technological innovation in the artificial intelligence (AI) domain on productivity. We embed the recently released data on patents and publications related to AI into an augmented panel model of productivity growth, estimated for OECD countries, and compared to a non-OECD sample. Our instrumental variables' estimates, accounting for AI endogeneity, provide evidence in favour of the modern (AI) productivity paradox. We show that the development of AI technologies remains a niche innovation phenomenon with a negligible role in the officially recorded productivity growth process. This general result, i.e. the lack of a strong relationship between AI and productivity growth, is robust to changes in the country sample, in the way we quantify labour productivity or the creation of AI technology, in the specification of the empirical model (control variables) or in estimation methods.
    Keywords: technological innovation, productivity paradox, productivity growth, artificial intelligence, patents
    JEL: O33 O47
    Date: 2022–01
  12. By: O'Brien, Patrick
    JEL: N13 N10
    Date: 2022–03–22
  13. By: Pang, Ziyun
    Abstract: This paper analyzes the relationship between labor automation and economic growth. I build a task-based framework and utility to evaluate how labor automation range can maximize economy in different conditions. I also analyze relationships among labor automation, capital, consumption, and investment. I considered the fact that automation will be expanded due to technological advancements while labor tends to obtain new skills to be more competitive. The best labor automation depends on labor productivity and machine productivity. When labor productivity exceeds machine productivity, labor automation will be less than half of the total tasks. In the opposite case, labor automation will be more than half of the total tasks. I also demonstrated that the investment decreases rapidly when workers become more competitive. When disruptive technologies are introduced, consumption will increase sharply together with labor automation, which is consistent with the first conclusion.
    Keywords: Labor automation, economic growth, consumption, investment, technology.
    JEL: O4
    Date: 2022–01

This nep-gro issue is ©2022 by Marc Klemp. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.