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on Economic Growth |
| By: | Cuong LE-VAN; Ngoc Sang Pham; Thi Kim Cuong Pham |
| Abstract: | This paper investigates the nexus between foreign aid (in both forms: grant andloan), poverty trap, and economic development in a recipient country by using a Solowmodel with two new ingredients: a development loan and a fixed cost in the production process. The presence of this fixed cost generates a poverty trap. We show thatforeign aid may help the country to escape from the poverty trap and converge to astable steady-state in the long run, but only if (i) the country’s characteristics, such assaving rate, initial capital, governance quality, and productivity are good enough, (ii)the fixed cost is relatively low, and (iii) loan rule is generous enough. We also showthat our model with foreign aid has room for endogenous cycles, unlike the standardSolow model. |
| Keywords: | Development loan, economic dynamics, economic growth, foreign aid, grant, poverty trap |
| JEL: | O11 O19 O41 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2023-2&r=gro |
| By: | José Alves; José Carlos Coelho; Alexandre Roxo |
| Abstract: | Performing a panel data analysis for OECD countries, during the period between 1990 and 2019, this article investigates the relationship between economic growth and income inequalities. The main objective is to understand how the GDP and GNI per capita affect income inequality and how they differ. The results suggest a U-shaped relationship of both measures of economic growth with the market and disposable Gini indexes, the Palma and S80S20 ratios, and the income of the wealthier 10% of population, which contradicts the Kuznets hypothesis. Regarding the thresholds’ analysis, there is evidence that when GDP per capita is used, inequality is higher, leading to the conclusion that countries with policies that inflate GDP rather than GNI are the main contributors to the rise in inequalities in the last years. Furthermore, the results also show a behavioral similarity between the income of the richest 10% of population and income inequality. Lastly, there is also a possibility to promote GNI per capita increasing policies, which could lead to higher economic growth while minimizing income inequalities. |
| Keywords: | inequality, economic growth, Kuznets hypothesis, panel data |
| JEL: | D63 O47 C23 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10154&r=gro |
| By: | Been-Lon Chen (Institute of Economics, Academia Sinica, Taipei, Taiwan); Shian-Yu Liao (Fu Jen Catholic University); Dongpeng Liu (Nanjing University); Xiangbo Liu (Renmin University of China) |
| Abstract: | We revisit the Friedman rule in a labor search model and extend Heer (2003), Cooley and Quadrini (2004), and Wang and Xie (2013) to one that allows for endogenous growth. We show that, even without a liquidity effect or a CIA constraint on firms’wage payment, our model offers a different channel for moderate money growth to increase welfare. Intuitively, in a one-sector endogenous growth economy, the technology is of constant returns with respect to capital. When the labor market is frictional, a moderate increase in money growth induces an expansion in vacancy and employment. Labor and capital are complements in production. With an increase in employment, when the technology is neoclassical, the decreasing return in capital leads to a lower marginal product of labor. However, in an endogenous growth framework wherein the technology exhibits socially constant returns in capital, the marginal product of labor is constant. Due to a constant marginal product of labor, modest inflation raises employment, enlarges economic growth, and increases welfare. Moreover, the optimallong-run inflation rate departs from the Friedman rule, even when the Hosios rule holds. Fi-nally, wefind that our model with sustainable growthfits the data better than that withoutsustainable growth. |
| Keywords: | Endogenous Growth, Money Supply, Labor Search, Unemployment, Welfare |
| JEL: | E41 J64 O42 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:sin:wpaper:22-a003&r=gro |
| By: | José Alves; José Carlos Coelho; Alexandre Roxo |
| Abstract: | Performing a panel data analysis for OECD countries, during the period between 1990 and 2019, this dissertation investigates the relationship between economic growth and income inequalities. The main objective is to understand how the GDP and GNI per capita affect income inequality and how they differ. The results suggest a U-shaped relationship of both measures of economic growth with the market and disposable Gini indexes, the Palma and S80S20 ratios, and the income of the wealthier 10% of population, which contradicts the Kuznets hypothesis. Regarding the thresholds’ analysis, there is evidence that when GDP per capita is used, inequality is higher, leading to the conclusion that countries with policies that inflate GDP rather than GNI are the main contributors to the rise in inequalities in the last years. Furthermore, the results also show a behavioral similarity between the income of the richest 10% of population and income inequality. Lastly, there is also a possibility to promote GNI per capita increasing policies, which could lead to higher economic growth while minimizing income inequalities. |
| Keywords: | inequality; economic growth; Kuznets hypothesis; panel data |
| JEL: | D63 O47 C23 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02542022&r=gro |
| By: | Daniel Aparicio-Pérez (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Maria Teresa Balaguer-Coll (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | Institutions have been proved as a fundamental driver of long-run growth (Acemoglu et al., 2005) and, therefore, their functioning, i.e., their quality of governance, is a well-known theoretical fact in the literature on economic growth, which has been widely studied at both country and regional levels. Nevertheless, there is a lack of literature on how this relationship behaves when considering the hierarchical structure that regions and countries present. To solve this problem, we propose a novel approximation to the question, relying on multilevel econometric techniques, highly applied in other fields such as education or psychology, but much less employed in economics. We empirically analyze how much of the effect shown by the quality of government on the economic development of a given region can be attributed to the quality of government of its belonging cluster i.e the country. We argue that ignoring the multilevel logic may lead to overweighting the real influence of regional governance quality and, conversely, under-weighting (or directly overlooking) the effect of the country’s governance quality on the economic development of a given region. We show empirically that the aggregate framework (and its quality) given by the national level of institutions outweighs the effect that lower government ties may present on the economic development of a region. |
| Keywords: | economic development; Europe; quality of government; multilevel; regions |
| JEL: | D04 E02 H7 H11 O43 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:jau:wpaper:2023/01&r=gro |
| By: | Yit Wey Liew (Monash University); Muhammad Habibur Rahman (Durham University); Audrey Kim Lan Siah (Monash University) |
| Abstract: | This study examines how the historical rail stations condition long-run development, using Colonial Malaya as a laboratory. Constructing a novel historical data on rail stations, agglomeration centers, tin mines and rubber plantations dated back to a century and matching with contemporary data on economic activity at one-kilometer cell level, we find that the earlier a region obtains rail stations, the higher level of economic activity it performs today due to agglomeration economies. These results hold even in regions that have already abandoned colonial stations. This study signifies the role of investment on transport infrastructure to accelerate local economic activity. |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:dur:durham:2023_01&r=gro |