nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒07‒18
eight papers chosen by
Marc Klemp
University of Copenhagen

  1. Millet, Rice, and Isolation: Origins and Persistence of the World's Most Enduring Mega-State By Kung, James Kai-sing; Özak, Ömer; Putterman, Louis; Shi, Shuang
  2. Comparative European Institutions and the Little Divergence, 1385-1800 By António Henriques; Nuno Palma
  3. Cliometrics and the Future of Economic History By Claude Diebolt; Michael Haupert
  4. Mother Africa's Exceptionalism? Income and Fertility Redux By Gradstein, Mark; Ishak, Phoebe W.
  5. Causality between Domestic Investment and Economic Growth in Arab Countries By Bakari, Sayef; El Weriemmi, Malek
  6. Economic activity and climate change By Ar\'anzazu de Juan; Pilar Poncela; Vladimir Rodr\'iguez-Caballero; Esther Ruiz
  7. Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020 By Ellora Derenoncourt; Chi Hyun Kim; Moritz Kuhn; Moritz Schularick
  8. Tillers of Prosperity: Land Ownership, Reallocation, and Structural Transformation By Kitamura, Shuhei

  1. By: Kung, James Kai-sing; Özak, Ömer; Putterman, Louis; Shi, Shuang
    Abstract: We propose and test empirically a theory describing the endogenous formation and persistence of mega-states, using China as an example. We suggest that the relative timing of the emergence of agricultural societies, and their distance from each other, set off a race between their autochthonous state-building projects, which determines their extent and persistence. Using a novel dataset describing the historical presence of Chinese states, prehistoric development, the diffusion of agriculture, and migratory distance across 1° x 1° grid cells in eastern Asia, we find that cells that adopted agriculture earlier and were close to Erlitou - the earliest political center in eastern Asia - remained under Chinese control for longer and continue to be a part of China today. By contrast, cells that adopted agriculture early and were located further from Erlitou developed into independent states, as agriculture provided the fertile ground for state-formation, while isolation provided time for them to develop and confront the expanding Chinese empire. Our study sheds important light on why eastern Asia kept reproducing a mega-state in the area that became China and on the determinants of its borders with other states.
    Keywords: State,Agriculture,Isolation,Social Complexity,Stickiness to China,Erlitou,East Asia
    JEL: F50 F59 H70 H79 N90 O10 R10 Z10 Z13
    Date: 2022
  2. By: António Henriques; Nuno Palma
    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 together with 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: N13 N23 O10 P14 P16
    Date: 2022–06
  3. By: Claude Diebolt (BETA/CNRS (UMR 7522), University of Strasbourg, 61 avenue de la Forêt Noire, France); Michael Haupert (University of Wisconsin-La Crosse)
    Date: 2022
  4. By: Gradstein, Mark (Ben Gurion University); Ishak, Phoebe W. (Aix Marseille University)
    Abstract: We revisit the effect of long run income growth on population fertility in some of the poorest countries in the world. Causal inference is enabled through proxying income windfalls by oil price shocks in oil rich versus oil poor provinces. Using various fertility measures as outcomes, we find that long run income growth significantly and robustly reduces fertility. Further analysis suggests that young women's fertility is particularly affected and that women's education; age of marriage, and the age of first birth, but not the use of contraceptives, are among the important mechanisms.
    Keywords: economic development, population fertility, Africa
    JEL: I15 O15 O47
    Date: 2022–04
  5. By: Bakari, Sayef; El Weriemmi, Malek
    Abstract: The aim of this investigation is to examine the nexus between domestic investment and economic growth in Arab countries. To attempt our goal, we used annual data for the period 1990 – 2020 and Vector Error Correction Model. Empirical analysis indicates that there is no relationship between domestic investment and economic growth in the long run. However, we find a bidirectional causality between domestic investment and economic growth in the short run. These results provide evidence that domestic investment is necessary in Arab countries’ economy and is presented as an engine of growth since they cause economic growth in the short term. But they are not carried out and treated with a solid and fair manner, which offer new insights into Arabe countries’ investment policy for promoting economic growth.
    Keywords: Domestic Investment, Economic Growth, VECM, Arab Countries
    JEL: E2 O11 O20 O47
    Date: 2022
  6. By: Ar\'anzazu de Juan; Pilar Poncela; Vladimir Rodr\'iguez-Caballero; Esther Ruiz
    Abstract: In this paper, we survey recent econometric contributions to measure the relationship between economic activity and climate change. Due to the critical relevance of these effects for the well-being of future generations, there is an explosion of publications devoted to measuring this relationship and its main channels. The relation between economic activity and climate change is complex with the possibility of causality running in both directions. Starting from economic activity, the channels that relate economic activity and climate change are energy consumption and the consequent pollution. Hence, we first describe the main econometric contributions about the interactions between economic activity and energy consumption, moving then to describing the contributions on the interactions between economic activity and pollution. Finally, we look at the main results on the relationship between climate change and economic activity. An important consequence of climate change is the increasing occurrence of extreme weather phenomena. Therefore, we also survey contributions on the economic effects of catastrophic climate phenomena.
    Date: 2022–06
  7. By: Ellora Derenoncourt; Chi Hyun Kim; Moritz Kuhn; Moritz Schularick
    Abstract: The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped.
    JEL: J15 N11 N12
    Date: 2022–06
  8. By: Kitamura, Shuhei
    Abstract: This paper analyzes the role of property rights and agricultural technology in factor reallocation and structural transformation. Using a novel dataset, I show that the land reform enforced by the Allies after World War II, which redistributed the ownership of farmlands from landlords to tenants and promoted equality, led farmers to use more low-cost agricultural machines when they became available and to rely less on family labor for production, resulting in an increase in the outmigration of farmers' children from rural to urban areas and an increase in agricultural income. Then, I quantify the impact of the factor reallocation on the entire economy using a two-sector neoclassical growth model, and find that (a) both labor and capital reallocation affected economic growth, and (b) the standard of living during the postwar period was significantly lower without such reallocation. These results indicate that not only labor, but also capital, including agricultural machines, is an important factor for structural transformation, and that property rights play a vital role in this process.
    Date: 2022–05–19

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