nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒10‒17
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. Patience and Comparative Development By Sunde, Uwe; Dohmen, Thomas; Enke, Benjamin; Falk, Armin; Huffmann, David; Meyerheim, Gerrit
  2. Solving the Longitude Puzzle: A Story of Clocks, Ships and Cities By Martina Miotto; Luigi Pascali
  3. Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020 By Ellora Derenoncourt; Chi Hyun Kim; Moritz Kuhn; Moritz Schularick
  4. A Framework for Economic Growth with Capital-Embodied Technical Change By Benjamin F. Jones; Xiaojie Liu
  5. Radical technologies, recombinant novelty and productivity growth: a cliometric approach By Marianna Epicoco; Magali Jaoul-Grammare; Anne Plunket
  6. World Population Growth Revisited. 1960-2030 Some Preliminary Remarks By Enriqueta Camps
  7. A Meta-Analysis of the Total Economic Impact of Climate Change By Richard S.J. Tol; Richard S. J. Tol
  8. Spatial externalities, R&D spillovers, and endogenous technological change By Spyridon Tsangaris; Anastasios Xepapadeas; Athanasios Yannacopoulos
  9. The slow demographic transition in regions vulnerable to climate change By Thang Dao; Matthias Kalkuhl; Chrysovalantis Vasilakis
  10. Green Technologies, Environmental Policy and Regional Growth By Philip Kerner; Torben Klarl; Tobias Wendler

  1. By: Sunde, Uwe (LMU Munich); Dohmen, Thomas (University of Bonn); Enke, Benjamin (Harvard University); Falk, Armin (briq and University of Bonn); Huffmann, David (University of Pittsburgh); Meyerheim, Gerrit (LMU Munich)
    Abstract: This paper studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, and an extension to human capital externalities can quantitatively match the empirical evidence.
    Keywords: time preference; comparative development; factor accumulation;
    JEL: D03 D90 O10 O30 O40
    Date: 2021–11–11
  2. By: Martina Miotto; Luigi Pascali
    Abstract: In the 19th century, the process of European expansion led to unprecedented changes in the urban landscape outside of Europe, with the urban population moving towards the coast and tripling in size. We argue that the majority of these changes can be explained by a single innovation, the chronometer, which allowed European explorers and merchants to measure longitude at sea. We use high-resolution global data on climate, ship routes, and demography from 1750 to 1900 to investigate empirically (i) the role of the adoption of the marine chronometer in re-routing trans-oceanic navigation, and (ii) the impact of these changes on the distribution of cities and population across the globe. Our identification relies on the differential impact of the chronometer across trans-oceanic sailing routes.
    Keywords: longitude, chronometer, gravity, globalization, trade, development
    JEL: F1 F15 F43 R12 R4
    Date: 2022–03
  3. 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.
    Date: 2022–09
  4. By: Benjamin F. Jones; Xiaojie Liu
    Abstract: Technological advance is often embodied in capital inputs. This paper develops a model where capital innovations occur on two margins: (1) vertically, where a capital input becomes more productive at a given task; and (2) horizontally, where a capital input replaces labor at a given task. These two forms of technological advance engage in a macroeconomic “tug of war” when capital and labor have less than a unitary elasticity of substitution, and the resulting framework can meet numerous macroeconomic regularities. First, it can produce a balanced growth path and satisfy the Uzawa Growth Theorem—even though all technological progress occurs in capital inputs. Second, it can produce intuitive macroeconomic dynamics, adding perspectives on the apparent productivity slowdown and declining labor share of income. Third, it can produce rich industry dynamics and inform structural change, including declining GDP shares of agriculture and manufacturing, sectoral bottlenecks, the role of general purpose technologies, and the limited macroeconomic impacts of computing. Overall, this tractable framework can help resolve puzzling tensions between micro-level observations of technological advance and macroeconomic features of economic growth.
    JEL: O1 O4
    Date: 2022–09
  5. By: Marianna Epicoco (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - 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); Magali Jaoul-Grammare (BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - 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); Anne Plunket (RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay)
    Abstract: Using inventions with a high degree of recombinant novelty as proxy for radical technologies, this work provides a long-run quantitative analysis of the relationship between radical technologies and productivity growth. The empirical analysis is based on a cliometric approach and relies on Granger's causality to test the sign and direction of causality between the flow of radical technologies and productivity levels, in the USA between 1920 and 2000. At the aggregate level, results show that radical technologies cause a temporary acceleration of productivity growth and explain a considerable part of productivity variations. At technology-field level, the analysis indicates that productivity growth is driven by a few technological fields, mainly concentrated in science based sectors and in the sectors of specialized suppliers of capital equipment. Finally, with respect to the controversial issue of the endogeneity of radical technologies, at the aggregate level we find no causal relationship running from productivity to radical technologies, suggesting that these are exogenous. However, at technology-field level, we find a few endogenous technologies. Most of these are "demand-driven" as their flow increases when productivity grows, but they have no impact on productivity. Only in one technological field, the flow of radical technologies increases when productivity decreases and, at the same time, has a positive impact on productivity. This latter case may explain why technological revolutions and the whole process of longrun economic development are partly endogenous.
    Keywords: Radical technologies,Recombinant novelty,Productivity growth,Cliometrics,Granger's causality,Technological revolutions,Long-run economic development.
    Date: 2022
  6. By: Enriqueta Camps
    Abstract: This paper wants to enlarge evidence presented in the exploratory article by Camps and Engerman, “World Population Growth: The Force of Recent Historical Trends”, Journal of Interdisciplinary History, 44:4, 2014. Before the worldwide epidemic impact on mortality caused by Covid 19, world population was growing at a fast track. By 2005-2010 United Nations authorities and the World Bank were regarding population growth vis-à-vis resource availability as an important economic problem in the mid run. The origin of this sort of ideas dates back at least to Malthus on population pressure, diminishing marginal returns of land, scarcity of calories and therefore increase of prices. Before the first industrial revolution only epidemics could threat population growth as to loosen pressure on economic resources. The situation in the period we want to study is very different. By the second half of the 20th century the main reason behind population growth was the great improvement of life expectancies. In OECD countries life expectancies nearly doubled during the 20th century. The overall world situation was one of convergence. All continents with the exception of Africa were improving their mortality conditions. But Camps and Engerman (2014) prove that these facts were counterbalanced in years 1960-2010 by a similar in intensity but opposite in direction trend of fertility. In all continents with the exception of Africa fertility was diminishing, converging to low levels, though with some delay with respect to mortality, causing the population explosion (demographic transition). A very significant variable when explaining fertility evolution is female’s education. One year more of education of mothers led to 0,33 less children per couple. Pandemics, different marriage patterns (polygamy), poverty and a different role of children for the family economy draw a different picture in African countries. In this paper we present further quantitative evidence on the impact of population growth, using population growth as an approximate proxy of the aggregated demand evolution at the world level, on prices and output as well as the population growth projections of the twenty first century.
    Keywords: world population growth, sustainability
    JEL: A11 A12 I15 J11 N3
    Date: 2022–06
  7. By: Richard S.J. Tol; Richard S. J. Tol
    Abstract: Earlier meta-analyses of the economic impact of climate change are updated with more data, with three new results: (1) The central estimate of the economic impact of global warming is always negative. (2) The confidence interval about the estimates is much wider. (3) Elicitation methods are most pessimistic, econometric studies most optimistic. Two previous results remain: (4) The uncertainty about the impact is skewed towards negative surprises. (5) Poorer countries are much more vulnerable than richer ones. A meta-analysis of the impact of weather shocks reveals that studies, which relate economic growth to temperature levels, cannot agree on the sign of the impact whereas studies, which make economic growth a function of temperature change do agree on the sign but differ an order of magnitude in effect size. The former studies posit that climate change has a permanent effect on economic growth, the latter that the effect is transient. The impact on economic growth implied by studies of the impact of climate change is close to the growth impact estimated as a function of weather shocks. The social cost of carbon shows a similar pattern to the total impact estimates, but with more emphasis on the impacts of moderate warming in the near and medium term.
    Keywords: climate change, weather shocks, economic growth, social cost of carbon
    JEL: O44 Q54
    Date: 2022
  8. By: Spyridon Tsangaris; Anastasios Xepapadeas; Athanasios Yannacopoulos
    Abstract: We incorporate the spatial dimension into a standard expanding variety growth model based on R&D. The spatial interaction is introduced through spatial production spillovers, knowledge diffusion across space, and the capability for spatial heterogeneity. Forward-looking agents who operate in a nite continuous geographic area choose how much to innovate at each point in time and space. We study the properties of equilibrium and optimal allocations and argue that the characteristics are different from those of the non-spatial model, which alter the appropriate policy measures. We show how spatial interactions may lead regions with spatial homogeneity to differ in their growth rates and areas with spatial heterogeneity to share the same growth rates in the long run. Finally, we present numerical examples to illustrate the different dynamic outcomes and stylized facts from the US economy.
    Keywords: endogenous growth, knowledge diffusion, R&D, scale effects, spatial development, spatial production externalities
    Date: 2022–10–03
  9. By: Thang Dao; Matthias Kalkuhl; Chrysovalantis Vasilakis
    Abstract: This paper considers the persistent effects of climate change on the speed of demographic transition, and hence on the size of the population in regions that are the least developed and the most vulnerable to climate change, such as Sub-Saharan Africa. These effects are transmitted through interactions between the education gender gap within families, fertility, and the local environment, through which the demographic transition is delayed. Environmental conditions affect intra-household labor allocation because of the impacts on local resources under the poor infrastructural system. Examples include the collection of essential resources, e.g. clean water and firewood, by women for their families’daily lives. Climate change causes damage to local resources, offsetting (partially) the role of technological progress and infrastructure investment in saving time that women spend on their housework duties. Hence, the gender inequality in education/income is upheld, delaying declines in fertility and creating population momentum. The bigger population, in turn, degrades local resources and the environment through expanded production. The interplay between local resources, gender inequality, and population, under the persistent effect of climate change, may thus generate a slow demographic transition and stagnation of the least developed regions. We provide empirical confirmation for our theoretical predictions using data from 44 African countries in the period from 1960 to 2017.
    Date: 2022–09
  10. By: Philip Kerner; Torben Klarl; Tobias Wendler
    Abstract: Green technologies are at the very core of endeavors to combine economic and environmental targets to achieve sustainable growth. In this article, we aim to determine the impact of green technology development on total factor productivity of European regions. Our paper contributes to the literature on technological change and regional growth in various ways. i) Our paper is, to the best of our knowledge, the first to assess the specific role of green technologies for regional growth on a broad empirical base. ii) We advance methodologically on the pertinent literature by explicitly accounting for cross-sectional dependence in our empirical approach. iii) By providing a simple theoretical framework, we directly link our results to implications of environmental policies for capital accumulation and composition dynamics, contributing to the ongoing debate revolving around the strong version of the Porter hypothesis. Our results, based on a sample of 270 European NUTS-2 regions over 25 years, imply that general technology development is mostly associated with positive economic returns, but our data is not supportive of positive economic returns to green technologies.
    Keywords: Regional Growth, Green Technologies, Environmental Policy, Cross-Sectional Dependence
    JEL: C23 O0 O33
    Date: 2021–06

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