nep-gro New Economics Papers
on Economic Growth
Issue of 2022‒11‒28
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. Population and Technological Growth: Evidence from Roe v. Wade By John T. H. Wong; Matthias Hei Man; Alex Li Cheuk Hung
  3. Running Primary Deficits Forever in a Dynamically Efficient Economy: Feasibility and Optimality By Andrew B. Abel; Stavros Panageas
  4. The Impact of the Spatial Population Distribution on Economic Growth: Evidence from the United States By Constantin Bürgi; Nisan Gorgulu
  5. Mechanics of Spatial Growth By Sheng Cai; Lorenzo Caliendo; Fernando Parro; Wei Xiang
  6. Nexus Among Innovations, Financial Development and Economic Growth in Developing Countries By Audi, Marc; Ali, Amjad; Fayad Hamadeh, Hani
  7. Wealth and its Distribution in Germany, 1895-2018 By Thilo N H Albers; Charlotte Bartels; Moritz Schularick
  8. African Political Institutions and the Impact of Colonialism By Jutta Bolt; Leigh Gardner; Jennifer Kohler; Jack Paine; James A. Robinson

  1. By: Kung, James Kai-sing; Özak, Ömer (Southern Methodist University); 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-degree x 1-degree 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.
    Date: 2022–06–05
  2. By: John T. H. Wong; Matthias Hei Man; Alex Li Cheuk Hung
    Abstract: We exploit the heterogeneous impact of the Roe v. Wade ruling by the US Supreme Court, which ruled most abortion restrictions unconstitutional. Our identifying assumption is that states which had not liberalized their abortion laws prior to Roe would experience a negative birth shock of greater proportion than states which had undergone pre-Roe reforms. We estimate the difference-in-difference in births and use estimated births as an exogenous treatment variable to predict patents per capita. Our results show that one standard deviation increase in cohort starting population increases per capita patents by 0.24 standard deviation. These results suggest that at the margins, increasing fertility can increase patent production. Insofar as patent production is a sufficient proxy for technological growth, increasing births has a positive impact on technological growth. This paper and its results do not pertain to the issue of abortion itself.
    Date: 2022–11
  3. By: Andrew B. Abel; Stavros Panageas
    Abstract: Government debt can be rolled over forever without primary surpluses in some stochastic economies, including some economies that are dynamically efficient. In an overlapping-generations model with constant growth rate, g, of labor-augmenting productivity, and with shocks to the durability of capital, we show that along a balanced growth path, the maximum sustainable ratio of bonds to capital is attained when the riskfree interest rate, r[sub]f, equals g. Furthermore, this maximal ratio maximizes utility per capita along a balanced growth path and ensures that the economy is dynamically efficient.
    JEL: E0 E6 H60
    Date: 2022–10
  4. By: Constantin Bürgi; Nisan Gorgulu
    Abstract: We look at a part of the spatial angle of economic growth. We introduce a new measure Spatial Population Concentration (SPC) that captures the weighted average population surrounding every person within a geographic area. The weights are a function of the distance between the person in question and everyone else. One special case of the SPC would be to measure how many people live on average within a given radius of every person within a geographic area. We then calculate the SPC measure at the US county level for various radii and identify that the measure has the strongest relationship with subsequent economic growth for a 25km radius. Interacting SPC with various infrastructure measures increases the radius to 50km. This suggests that regional policies which affect density as infrastructure projects should target the 25-50km distance range to maximize the growth impact.
    Keywords: spatial population concentration, endogeneous growth, spillover, the United States
    JEL: O47 O51 R12
    Date: 2022
  5. By: Sheng Cai; Lorenzo Caliendo; Fernando Parro; Wei Xiang
    Abstract: We develop a dynamic spatial growth model to explore the role of trade and internal migration in the process of spatial development and aggregate growth. Growth is shaped by the best global and local ideas that contribute to the local stock of knowledge. Global ideas diffuse more to locations that are relatively more exposed to international trade. Local ideas are diffused across space when workers move to another location. We embed the diffusion of ideas through trade and migration into a multi-country, multi-region framework with international trade, forward-looking dynamic migration decisions, and endogenous capital accumulation. We apply our framework to study the role of initial conditions, international trade, and internal migration on China’s spatial development and aggregate growth during the 1990s and 2000s. We find that initial conditions across space, idea diffusion, and capital accumulation play an important role in understanding the process of spatial development and aggregate growth in China. Changes in international trade costs and mobility restrictions during the 1990s and 2000s also contribute to aggregate growth, with large heterogeneity across space.
    JEL: F1 F10 F16 O1 O15
    Date: 2022–10
  6. By: Audi, Marc; Ali, Amjad; Fayad Hamadeh, Hani
    Abstract: Studying the level of economic growth remains a topic of discussion among economists and policymakers. As economic growth further impacts the socioeconomic development of the country. The present study has investigated the impact of innovations and financial development on economic growth in case 58 developing counties from 2000 to 2020. To analyze the stationarity of the variables LLC, ADF-Fisher, IPS, and PP-Fisher unit roots have been used. This study uses a panel autoregressive distribution lag co-integration approach and a vector error-correction model for short-run dynamics of the model. For investigating the causal relationship among the variables variance decomposition and impulse response function have been applied. The outcomes of the study show that innovations, availability of physical capital, and trade have a positive and significant impact on economic growth. The results show that financial development has a negative and significant impact on economic growth. It is suggested that for higher economic growth, developing countries improve the threshold level of financial development and use an innovative process of production. Urbanization and inflation hurt economic growth. Thus, developing countries should promote a stable inflation rate with liberalized trade, innovation, and physical capital to enhance economic growth.
    Keywords: economic growth, financial development, inflation rate, innovations
    JEL: E31 G20 O30 O40
    Date: 2022
  7. By: Thilo N H Albers (Humboldt University of Berlin, Lund University [Lund]); Charlotte Bartels (DIW Berlin - Deutsches Institut für Wirtschaftsforschung, IZA - Institute for the Study of Labor, UCFS); Moritz Schularick (University of Bonn, Institut d'Études Politiques [IEP] - Paris, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: German history over the past 125 years has been turbulent. Marked by two world wars, revolutions and major regime changes, as well as a hyperinflation and three currency reforms, expropriations and territorial divisions, it provides unique insights into the role of country-specific shocks in shaping long-run wealth dynamics. This paper presents the first comprehensive study of wealth and its distribution in Germany since the 19th century. We combine tax and archival data, household surveys, historical national accounts, and rich lists to analyze the evolution of the German wealth distribution over the long run. We show that the top 1% wealth share has fallen by half, from close to 50% in 1895 to 27% today. Nearly all of this decline was the result of changes that occurred between 1914 and 1952. The interwar period and the wealth taxation in the aftermath of World War II stand out as the great equalizers in 20th century German history. After unification in 1990, two trends have left their mark on the German wealth distribution. Households at the top made substantial capital gains from rising business wealth while the middle-class had large capital gains in the housing market. The wealth share of the bottom 50% halved since 1990. Our findings speak to the importance of historical shocks to the distribution and valuations of existing wealth in explaining the evolution of the wealth distribution over the long run.
    Keywords: Wealth inequality,portfolio heterogeneity,saving,wealth taxation
    Date: 2022–06
  8. By: Jutta Bolt; Leigh Gardner; Jennifer Kohler; Jack Paine; James A. Robinson
    Abstract: Conventional wisdom proposes deep historical roots for authoritarianism in Africa: either colonial “decentralized despotism” or enduring structural features. We present a new theoretical perspective. Africans sought autonomous local communities, which constrained precolonial rulers. Colonizers largely left constrained institutions in place given budget limitations. Innovation, where it occurred, typically scaled up councils rather than invented despotic chiefs. To test these implications, we compiled two original datasets that measure precolonial institutions and British colonial administrations around 1950 in 463 local government units. Although colonial institutions were authoritarian at the national level, most Native Authorities were constrained by some type of council and many local institutions lacked a singular ruler entirely. The form of Native Authority institutions and the composition of councils are strongly correlated with precolonial institutional forms. The persistence of institutional constraints at the local level suggests alternative channels through which colonial rule fostered postcolonial authoritarian regimes.
    JEL: D7 H1 P51
    Date: 2022–10

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