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on Economic Growth |
| By: | Stephan Heblich; Stephen J. Redding; Hans-Joachim Voth |
| Abstract: | Did overseas slave-holding by Britons accelerate the Industrial Revolution? We provide theory and evidence on the contribution of slave wealth to Britain’s growth prior to 1835. We compare areas of Britain with high and low exposure to the colonial plantation economy, using granular data on wealth from compensation records. Before the major expansion of slave holding from the 1640s onwards, both types of area exhibited similar levels of economic activity. However, by the 1830s, slavery wealth is strongly correlated with economic development – slave-holding areas are less agricultural, closer to cotton mills, and have higher property wealth. We rationalize these findings using a dynamic spatial model, where slavery investment raises the return to capital accumulation, expanding production in capital-intensive sectors. To establish causality, we use arguably exogenous variation in slave mortality on the passage from Africa to the Indies, driven by weather shocks. We show that weather shocks influenced the continued involvement of ancestors in the slave trade; weather-induced slave mortality of slave-trading ancestors in each area is strongly predictive of slaveholding in 1833. Quantifying our model using the observed data, we find that Britain would have been substantially poorer and more agricultural in the absence of overseas slave wealth. Overall, our findings are consistent with the view that slavery wealth accelerated Britain’s industrial revolution. |
| JEL: | F60 J15 N63 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30451&r= |
| By: | Torben Klarl |
| Abstract: | Technological progress leads to the development of robots that are more error-prone and fragile than their predecessors. As a consequence, the utilization of the existing automation capital stock is associated with higher wear and tear, CPU overload or communication downtime and, as a consequence, an increase of depreciation costs. This in turn affect new investments in the future. Considering a growth model with physical and automation capital utilization, we argue that in a fully automated society, the utilized automation capital is a perfect substitute for labor, not the automation capital stock per se. We show that it is not necessarily the introduction of capital utilization by itself, but the relationship between the elasticities of utilization of automation and physical capital that plays a crucial role in slowing down the convergence speed in a model that reflects an automated society. |
| Keywords: | Automation, Capital Utilization, Perpetual Economic Growth |
| JEL: | O40 |
| Date: | 2022–03 |
| URL: | http://d.repec.org/n?u=RePEc:atv:wpaper:2202&r= |
| By: | Uchida, Yuki; Ono, Tetsuo |
| Abstract: | We demonstrate the interaction between short-lived governments’ decisions on education and pension policies and parents’ decisions on fertility in an overlapping generations growth model. Our analysis shows that increased life expectancy lowers fertility, decreases the ratio of education expenditure to GDP, and increases the ratio of pension benefits to GDP as well as per capita GDP growth rate. We also consider a reform that reduces pension benefits designed by a long-lived planner and show that the reduction is optimal from a social welfare perspective when the planner gives a large weight to future generations. |
| Keywords: | Public Pension; Public Education; Probabilistic Voting; Overlapping Generations |
| JEL: | D70 E62 H52 H55 |
| Date: | 2022–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114543&r= |
| By: | Jieun Lee |
| Abstract: | Economists' interests in growth theory have a very long history (Harrod, 1939; Domar, 1946; Solow, 1956; Swan 1956; Mankiw, Romer, and Weil, 1992). Recently, starting from the neoclassical growth model, Ertur and Koch (2007) developed the spatially augmented Solow-Swan growth model with the exogenous spatial weights matrices ($W$). While the exogenous $W$ assumption could be true only with the geographical/physical distance, it may not be true when economic/social distances play a role. Using Penn World Table version 7.1, which covers year 1960-2010, I conducted the robust Rao's score test (Bera, Dogan, and Taspinar, 2018) to determine if $W$ is endogeonus and used the maximum likelihood estimation (Qu and Lee, 2015). The key finding is that the significance and positive effects of physical capital externalities and spatial externalities (technological interdependence) in Ertur and Koch (2007) were no longer found with the exogenous $W$, but still they were with the endogenous $W$ models. I also found an empirical strategy on which economic distance to use when the data recently has been under heavy shocks of the worldwide financial crises during year 1996-2010. |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2209.05562&r= |
| By: | Ponthiere, Gregory |
| Abstract: | Phelps's (1961) Golden Rule states an unambiguous relationship be- tween optimal capital intensity and fertility: a rise in fertility decreases the optimal capital intensity, because a higher fertility increases the in- vestment required to sustain a given capital to labour ratio (i.e., the cap- ital dilution effect). Using a matrix population model embedded in a two-period OLG setting, we examine the robustness of that relationship to the partitioning of the population into 2 subpopulations having dis- tinct fertility behaviors. We derive the optimal accumulation rule in that framework, and we show that, unlike what prevails under a homogeneous population, a rise in fertility does not necessarily reduce the Golden Rule capital intensity, but increases it when the composition effect induced by the fertility change outweighs the standard capital dilution effect pre- vailing under a fixed partition of the population. We also explore the robustness of these results to a finer description of heterogeneity, that is, a partitioning of the population into a larger number of subpopulations. |
| Keywords: | Golden Rule,capital accumulation,fertility,OLG models,matrix population models,heterogeneity |
| JEL: | E13 E21 E22 J13 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1165&r= |
| By: | Ahmad, Mahyudin; Siong Hook, Law |
| Abstract: | This paper investigates the nexus between financial development (FD), institutions, and economic growth by employing a spatial autoregressive model on a panel dataset covering 82 countries from 1990 to 2019. The spatial dependence between countries is measured via geographical and institutional proximities, the latter hitherto has rarely been explored in the finance-growth literature. Institutional proximity concept postulates that institutionally similar countries are expected to have similar level of economic growth and greater size of spillover once the spatial effects of FD and institutional quality are controlled for. Overall, the findings give empirical support to the above proposition, as FD and political institutions are shown to have significant positive effects on growth. In the case of FD, its growth-effect is beneficial up to a certain threshold beyond which it becomes negative. The results also find significant positive spatial lag growth term in the model indicating the presence of indirect spillover effects of FD and institutions onto the growth of neighbouring countries, both in geographical institutional spheres. Furthermore, the spatial growth model with institutional proximity matrix is shown to have higher rate of convergence and greater size of spillover than the model with geographical proximity. These findings are robust to various model specifications, and the paper concludes with some policy recommendations. |
| Keywords: | Economic growth, financial development, institutional proximity, spatial fixed effects, spatial lag model. |
| JEL: | C31 O16 O43 |
| Date: | 2022–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114471&r= |
| By: | Laurent Gauthier (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Abstract: | Traditional cliometrics usually focus on economic data from the modern and contemporary periods, and do not have much to do with ancient history, mostly due to a lack of relevant data. Separately, the field of cliometrics and complexity, by looking at data in the light of complex systems analysis, gives access to a broader range of sources. Concentrating on the distinction between cliometrics and historical economics, we explore the epistemic gap between economics and history, which we reduce to two fundamental differences: the relationship to primary sources, and the presence of a nomothetic framework. Using this gap as a guide, we argue that a logical expansion of cliometrics and complexity, which do not have to be about the economy, but can operate on primary historical sources, could address a much broader set of periods, societies, and phenomena, leaning on microeconomic models. Redefining cliometrics in that way gives them access to the extensive corpora of historical material that digital humanities have produced. Working closer to primary sources contributes to bridging the epistemic gap between economics and history, and the systematic and explicit way in which cliometrics and complexity tackle data contributes to making historical research more scientific. |
| Keywords: | Cliometrics,historical economics,historical method |
| Date: | 2022–08–20 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03754911&r= |