nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒04‒10
five papers chosen by
Marc Klemp
University of Copenhagen

  1. The relationship between political instability and economic growth in advanced economies: Empirical evidence from a panel VAR and a dynamic panel FE-IV analysis By Dirks, Maximilian; Schmidt, Torsten
  2. India's economic development since independence: An interpretative survey By Kunal Sen
  3. Political Institutions and Output Collapses By Patrick A. Imam; Jonathan R. W. Temple
  4. Growth and immigration: unpicking the confusion By Alan Manning
  5. Clean technologies for growth and equity By Ralf Martin

  1. By: Dirks, Maximilian; Schmidt, Torsten
    Abstract: This paper analyzes the relationship between political instability and economic growth in advanced economies. Using a panel of 34 advanced economies from 1996 to 2020, we first employ a panel VAR estimated via System GMM, which allows us to explore the endogenous relationship between economic growth and political instability and to identify potential transmission channels. Second, we use an instrumental variable approach that exploits variation in median temperature and spillover effects of political instability from culturally approximate countries to establish causality. The empirical results suggest that political instability reduces GDP by 4 to 7 % five years after the shock, mainly through lower investment and consumption. A one standard deviation increase in economic growth reduces political instability by half a standard deviation, five years after the shock.
    Keywords: Political instability, economic growth, panel VAR, system GMM, Panel IV, local projection
    JEL: C33 C26 O43 P16
    Date: 2023
  2. By: Kunal Sen
    Abstract: When India became a republic in 1950, the economy was primarily agrarian, with three-fifths of output originating from agriculture. In the sixty years since independence, there has been a significant transformation of economic activity away from agriculture, with less than one-fifth of output now originating from agriculture and the rest from manufacturing and services. Since the 1980s, along with structural change, there has been strong economic growth, till 2010, followed by a period of declining growth.
    Keywords: Economic growth, Structural change, Economic policy, India
    Date: 2023
  3. By: Patrick A. Imam; Jonathan R. W. Temple
    Abstract: Major output collapses are costly and frequent in the developing world. Using cross-country data, we classify five-year periods using a two-dimensional state space based on growth regimes and political institutions. We then model the joint evolution of output growth and political institutions as a finite state Markov chain, and study how countries move between states. We find that growth is more likely to be sustained under democracy than under autocracy; output collapses are more persistent under autocracy; and stagnation under autocracy can give way to outright collapse. Democratic countries appear to be more resilient.
    Keywords: Economic growth; autocracy; democracy
    Date: 2023–02–17
  4. By: Alan Manning
    Abstract: More people in a country leads to a bigger economy, but not necessarily an improved standard of living. Alan Manning unpicks the complexities in the debate.
    Keywords: immigration, GDP, growth, UK Economy, labour markets, Wages
    Date: 2023–02–21
  5. By: Ralf Martin
    Abstract: Public investment in developing energy sources that don't cause climate change is a strategy for economic growth that could also contribute to the UK's levelling up agenda, says Ralf Martin. His analysis indicates that subsidies for research and development in 'clean' technologies can bring returns more than 40% higher than average.
    Keywords: innovation, knowledge spillovers, clean technology, innovation policy, patent data, Green Growth
    Date: 2022–10–20

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