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on Economic Growth |
| By: | Gregory Casey; Stephie Fried; Ethan Goode |
| Abstract: | We use theory and empirics to distinguish between the impact of temperature on transition (temporary) and steady state (permanent) growth in output per capita. Standard economic theory suggests that the long-run growth rate of output per capita is determined entirely by the growth rate of total factor productivity (TFP). We find evidence suggesting that the level of temperature affects the level of TFP, but not the growth rate of TFP. This implies that a change in temperature will have a temporary, but not a permanent, impact on growth in output per capita. To highlight the quantitative importance of distinguishing between permanent and temporary changes in economic growth, we use our empirical estimates and theoretical framework to project the impacts of future increases in temperature from climate change. We find losses that are substantial, but smaller than those in the existing empirical literature that assumes a change in temperature permanently affects economic growth. |
| Keywords: | temperature; climate; macroeconomics; growth rates |
| Date: | 2022–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:94889&r= |
| By: | Dirk Krueger; Harald Uhlig |
| Abstract: | This paper characterizes the stationary equilibrium of a continuous-time neoclassical production economy with capital accumulation in which households can insure against idiosyncratic income risk through long-term insurance contracts. Insurance companies operating in perfectly competitive markets can commit to future contractual obligations, whereas households cannot. For the case in which household labor productivity takes two values, one of which is zero, and where households have log-utility we provide a complete analytical characterization of the optimal consumption insurance contract, the stationary consumption distribution and the equilibrium aggregate capital stock and interest rate. Under parameter restrictions, there is a unique stationary equilibrium with partial consumption insurance and a stationary consumption distribution that takes a truncated Pareto form. The unique equilibrium interest rate (capital stock) is strictly decreasing (increasing) in income risk. The paper provides an analytically tractable alternative to the standard incomplete markets general equilibrium model developed in Aiyagari (1994) by retaining its physical structure, but substituting the assumed incomplete asset markets structure with one in which limits to consumption insurance emerge endogenously, as in Krueger and Uhlig (2006). |
| JEL: | E10 E21 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30518&r= |
| By: | Gregory Casey; Stephie Fried; Matthew Gibson |
| 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; productivity; consumption; investments; structural changes; growth |
| JEL: | Q56 |
| Date: | 2022–10–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:94890&r= |
| By: | Sara Lowes |
| Abstract: | Culture – the set of socially transmitted values and beliefs held by individuals – has important implications for a wide variety of economic outcomes. Both the causes and consequences of culture have been the subject of work in Historical Political Economy. I first outline several theories on the origins, evolution, and transmission of culture. I then discuss various strategies for measuring culture. Finally, I review recent research in HPE that explores the origins of variation in culture and the economic consequences of culture. |
| JEL: | N01 P0 P50 Z1 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:30511&r= |
| By: | Jeremy Greenwood; Pengfei Han; Hiroshi Inokuma; Juan M. Sanchez |
| Abstract: | This article uses an endogenous growth model to study how the improvements in financing for innovative start-ups brought by venture capital (VC) affect firm innovation and growth. Partial equilibrium results show how lending contracts change as financing efficiency improves, while general equilibrium results demonstrate that better screening and development of projects by VC investors leads to higher aggregate productivity growth. |
| Keywords: | endogenous growth; financial development; innovation; IPO; screening; research and development; startups; venture capital |
| JEL: | E13 E22 G24 L26 O16 O31 O40 |
| Date: | 2022–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedlwp:94817&r= |
| By: | Claude Diebolt (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); Michael Haupert (UW-La Crosse - University of Wisconsin-La Crosse) |
| Abstract: | We give an overview of the origins of the Cliometric revolution, its place within the larger economic history discipline, and what we see as the future of cliometrics and economic history, not as separate disciplines, but as complementary approaches to the study of economic growth in the long run. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03778246&r= |
| By: | Rosas Martínez, Víctor Hugo |
| Abstract: | Our growth model results claim: A trade-off between remaining in equilibrium color and getting to the free-deprivations limit; can The decentralized solution reach pareto optimality; An endogenous change of the participation of capital; No endogenous growth; Whether an economy gets to the free-deprivations public services impact limit on growth depends on the technology; The paper contribution to be at the transitional dynamics field.. Not only is the model consistent with diverse empirical tests like Passinetti’s stylized facts. Claim after claim, one basically closes further conceiving the introduction of the provided limit as a fair novel addition |
| Keywords: | Economic Growth; Public Policy; Public Provisions; Limit; Extra Capacity |
| JEL: | O21 O23 O40 |
| Date: | 2022–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114698&r= |
| By: | Richard S.J. Tol (Department of Economics, University of Sussex, BN1 9SL Falmer, United Kingdom) |
| 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 impactof 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: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:sus:susewp:0422&r= |
| By: | Selahmi, Basma; Liu, Chunping |
| Abstract: | This paper investigates whether natural resource revenues in the GCC countries lead to economic growth or if the resource curse is evident. Using panel data for six countries during 1996-2019, we investigate the indirect relationship in which natural resources and economic growth operate through different institutional qualities. Using two different classifications of export composition, we show that point-source resources, particularly fuel exportation, worsen the economic performance of a country. In contrast, diffuse-source resources do not follow this pattern. Nevertheless, the results also provide the threshold level of institutional, beyond which fuel wealth enhances economic growth. This result suggests that for fuel exportation to have a meaningful impact on economic growth, GCC countries must attain a certain threshold of institutional quality. The results confirm our hypothesis that institutions are decisive for the resource curse, therefore contrasting the claims of Sachs and Warner (1995, 2001) that institutions do not play a role. It, therefore, suggests that countries must adopt appropriate policy measures to improve their levels of institutional quality and soften the impact of a resource curse. |
| Keywords: | C5; E02; N5; O4 |
| JEL: | O13 O43 Q32 |
| Date: | 2022–01–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114924&r= |
| By: | Witajewski-Baltvilks,Jan Ignacy; Fischer,Carolyn |
| Abstract: | If one region of the world switches its research effort from dirty to clean technologies, will other regions follow To investigate this question, this paper builds a North-South model that combines insights from directed technological change and quality-ladder endogenous growth models with business-stealing innovations. While North represents the region with climate ambitions, both regions have researchers choosing between clean and dirty applications, and the resulting technologies are traded. Three main results emerge: (i) In the long-run, if North's research and development (R&D) sector is large enough, researchers in South will follow the switch from dirty to clean R&D in North, motivated by the growing value of clean markets. (ii) If the two regions direct research effort toward different sectors and the outputs of the two sectors are gross substitutes, then the long-run growth rates in both regions are lower than if the global research effort were invested in one sector. (iii) If North's government induces its researchers to switch to clean R&D through clean technology subsidies, the welfare-maximizing choice for South is to ensure that all of its researchers switch too, unless the social discount rate is high. The last result is true even if South's R&D sector is large. |
| Date: | 2022–06–21 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:10096&r= |
| By: | Rafael González-Val (Universidad de Zaragoza and Institut d’Economia de Barcelona (IEB)); Pau Insa-Sánchez (Universitat de València); Julio Martinez-Galarraga (Universitat de Barcelona); Daniel A. Tirado-Fabregat (Universitat de València) |
| Abstract: | This paper explores the relationship between market access and education levels in the context of an industrializing economy, in this case Spain between the late nineteenth and early twentieth centuries. Specifically, we examine whether differences in regional accumulations of human capital could be related to market access, which would explain the divergent trajectories of regional economic growth in Spain. To do this, we empirically test the relationship between education variables and market potential for Spanish provinces between 1860 and 1930. We then focus on the mechanism that may be mediating this relationship, i.e. the skill premium. The results suggest that there were sizeable provincial differences in the return on investment in education, the explanation for which would be that those provinces with the highest market potential specialized more in skill-intensive sectors in which higher wages were paid. |
| Keywords: | Economic history, market access, human capital |
| JEL: | I25 N90 O15 R12 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:hes:wpaper:0229&r= |