nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒05‒22
ten papers chosen by
Marc Klemp
University of Copenhagen

  1. The Effect of the Out of Africa Migration on Cultural Diversity By Wainstock, Daniel Crisóstomo; Galor, Oded; Klemp, Marc
  2. Understanding Growth Through Automation: The Neoclassical Perspective By Lukasz A. Drozd; Mathieu Taschereau-Dumouchel; Marina Tavares
  3. Financial Literacy, Human Capital and Long-Run Economic Growth By Alberto Bucci; Riccardo Calcagno; Simone Marsiglio; Tiago Miguel Guterres Neves Sequeira
  4. MAY HUMAN CAPITAL RESCUE THE EMPTY PLANET? By Spyridon Boikos; Alberto Bucci; Tiago Miguel Guterres Neves Sequeira; Tiago Miguel Guterres Neves Sequeira
  5. Accumulation of capital, production functions and models of economic growth By João Ferreira do Amaral
  6. Political Conflict and Economic Growth in Post-Independence Venezuela By Kronick, Dorothy; Rodriguez, Francisco
  7. An optimal control problem with state constraints in a spatio-temporal economic growth model on networks By Alessandro Calvia; Fausto Gozzi; Marta Leocata; Georgios I. Papayiannis; Anastasios Xepapadeas; Athanasios N. Yannacopoulos
  8. The conditional influence of poverty, inequality and severity of poverty on economic growth in Sub-Saharan Africa By Simplice A. Asongu; Joel Hinaunye Eita
  9. Wars, Education and Economic Development By Jakob B. Madsen; Miethy Zaman
  10. Whether to decentralize and how to decentralize? The optimal fiscal federalism in an endogenous growth model By Chen, Xiaodong; Mi, Haoming; Zhou, Peng

  1. By: Wainstock, Daniel Crisóstomo (Brown University); Galor, Oded (Brown University); Klemp, Marc (University of Copenhagen)
    Abstract: Evidence suggests that the Out of Africa Migration has impacted the degree of intra-population genetic and phenotypic diversity across the globe. This paper provides the first evidence that this migration has shaped cultural diversity. Leveraging a folklore catalogue of 958 oral traditions across the world, we show that ethnic groups further away from East Africa along the migratory routes have lower folkloric diversity. This pattern is consistent with the compression of genetic, phenotypic, and phonemic traits along the Out of Africa migration routes, setting conditions for the emergence and proliferation of differential cultural diversity and economic development across the world.
    Keywords: diversity, culture, Out of Africa migration, folklore
    JEL: O10 Z10
    Date: 2023–04
  2. By: Lukasz A. Drozd; Mathieu Taschereau-Dumouchel; Marina Tavares
    Abstract: We study how advancements in automation technology affect the division of aggregate income between capital and labor in the context of long-run growth. Our analysis focuses on the fundamental trade-off between the labor-displacing effect of automation and its positive productivity effect in an elementary task-based framework featuring a schedule of automation prices across tasks linked to the state of technology. We obtain general conditions for the automation technology and technical change driving automation to be labor-share displacing. We identify a unique task technology that reconciles the Kaldor facts with the presence of automation along the balanced growth path. We show that this technology aggregates to the Cobb–Douglas production function — thus providing novel task-based microfoundations for this workhorse functional form. We employ our theory to study the connection between the recent declines in the labor share and the unique nature of the current, IT-powered wave of automation.
    Keywords: Automation; labor share; Uzawa’s theorem; Cobb-Douglas production function; capital-augmenting technological progress; balanced growth
    JEL: D33 E24 E25 J23 J24 O33 O4
    Date: 2022–08–26
  3. By: Alberto Bucci (Department of Economics, Management and Quantitative Methods (DEMM) - University of Milan, and ICEA (International Center for Economic Analysis, Canada); Riccardo Calcagno (Department of Management and Production Engineering, Polytechnic University of Turin); Simone Marsiglio (Department of Economics and Management, University of Pisa); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: We extend a two-sector endogenous growth model based on human capital accumulation along two different directions. First, by postulating that individuals may invest time-resources not only in the accumulation of human capital (general knowledge) but also in the accumulation of financial literacy (specific financial knowledge). Second, we maintain that the efficiency with which savings are transferred intertemporally may improve over time, e.g. through the presence of a financial system. We use the model to analyze the relationship between financial literacy and economic growth in the long run. We show that the properties of the balanced growth path equilibrium critically depend on how human capital and financial literacy affect the efficiency of the financial system. Moreover, finance promotes long-run economic growth through two alternative channels, driven either by dynamics of financial returns or by human capital accumulation, respectively. By calibrating the model to the US economy over the 1950-2019 period, we quantitatively assess the effect of financial literacy on long-term growth and the relative magnitude of the two channels.
    Keywords: Economic Growth, Financial Literacy, Financial Return, Human Capital.
    Date: 2023–12
  4. By: Spyridon Boikos (University of Macedonia (Department of Economics), Thessaloniki, Greece); Alberto Bucci (Department of Economics, Management and Quantitative Methods (DEMM) - University of Milan, and ICEA (International Center for Economic Analysis, Canada); Tiago Miguel Guterres Neves Sequeira (Department of Economics and Management, University of Pisa); Tiago Miguel Guterres Neves Sequeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: Recent evidence suggests that fertility rates are (and will be expected to remain in the future) below the replacement level for several countries and especially for the most technological advanced ones, which indicates that the World population will start decreasing sooner or later. In the light of this, we reconsider the Empty Planet result – Jones (2022) – and include human capital and class size effects in R&D endogenous growth models with decreasing population. We find that the introduction of human capital mitigates, or even overcomes, the Empty Planet result. In particular, under some mild conditions, our setting allows obtaining simultaneous long-run economic growth and secular productivity stagnation.
    Keywords: Endogenous economic growth, R&D, Human Capital, Declining Population, Empty Planet.
    Date: 2023–12
  5. By: João Ferreira do Amaral
    Abstract: This paper is about the possible interdependence of the assumptions related to the properties of the process of accumulation of capital and the properties of the production function as they are used in models of economic growth. The case of a semi-bounded substitution production function exemplifies this kind of interdependence and the consequent restrictions that may condition economic growth.
    Keywords: economic growth; technological change; innovation; production function.
    JEL: E10 E11 E22 N10 O30
    Date: 2023–04
  6. By: Kronick, Dorothy; Rodriguez, Francisco
    Abstract: Venezuela has suffered three economic catastrophes since independence: one each in the nineteenth, twentieth, and twenty-first centuries. Prominent explanations for this trilogy point to the interaction of class conflict and resource dependence. We turn attention to intra-class conflict, arguing that the most destructive policy choices stemmed not from the rich defending themselves against the masses but rather from pitched battles among elites. Others posit that Venezuelan political institutions failed to sustain growth because they were insufficiently inclusive; we suggest in addition that they inadequately mediated intra-elite conflict.
    Keywords: Growth, conflict, Venezuela, economic history
    JEL: N16 O43 O54
    Date: 2023–02–23
  7. By: Alessandro Calvia; Fausto Gozzi; Marta Leocata; Georgios I. Papayiannis; Anastasios Xepapadeas; Athanasios N. Yannacopoulos
    Abstract: We introduce a spatial economic growth model where space is described as a network of interconnected geographic locations and we study a corresponding finite-dimensional optimal control problem on a graph with state constraints. Economic growth models on networks are motivated by the nature of spatial economic data, which naturally possess a graph-like structure: this fact makes these models well-suited for numerical implementation and calibration. The network setting is different from the one adopted in the related literature, where space is modeled as a subset of a Euclidean space, which gives rise to infinite dimensional optimal control problems. After introducing the model and the related control problem, we prove existence and uniqueness of an optimal control and a regularity result for the value function, which sets up the basis for a deeper study of the optimal strategies. Then, we focus on specific cases where it is possible to find, under suitable assumptions, an explicit solution of the control problem. Finally, we discuss the cases of networks of two and three geographic locations.
    Date: 2023–04
  8. By: Simplice A. Asongu (Yaounde, Cameroon); Joel Hinaunye Eita (Johannesburg, South Africa)
    Abstract: Poverty and inequality represent major policy syndromes that are relevant in the achievement of most United Nations’ sustainable development goals (SDGs) in sub-Saharan Africa, while economic growth is also essential for the achievement of attendant SDGs. The present study extends existing literature by assessing the conditional influence of poverty, income inequality and severity of poverty on economic growth. The focus is on 42 countries in sub-Saharan Africa with data from 1980 to 2019. The Gini index is used to measure income inequality. Poverty is measured in terms of the poverty headcount ratio while the severity of poverty is computed as the squared of the poverty gap index. The empirical evidence is based on quantile regressions in order to assess how income inequality and poverty dynamics affect economic growth throughout the conditional distribution of economic growth. Our main finding shows that the negative response of economic growth to poverty is a decreasing function of economic growth. In other words, the incidence of poverty in reducing economic growth decreases with increasing levels of economic growth. In two specifications, the effect of inequality is negative in bottom quantiles and positive in top quantiles of the conditional distribution of economic growth. Policy implications are discussed, especially as it pertains to: (i) the relevance of poverty in mitigating economic growth in SSA contingent on initial levels of economic growth and (ii) comparative incidences of poverty and inequality in affecting economic growth.
    Keywords: poverty; inequality; economic growth; sub-Saharan Africa; econometrics; economics
    JEL: D31 I10 I32 K40 O55
    Date: 2023–01
  9. By: Jakob B. Madsen; Miethy Zaman
    Abstract: In this paper, we hypothesize that the prolonged wars in Latin America during most of the 19th century hindered human capital development and delayed economic progress well into the 20th century. Collecting novel data for the seven largest Latin American economies over the period 1820-2016, we show that the extraordinarily large share of military expenditure in total spending crowded out investment in education and R&D, which in turn had persistent effects on economic development.
    Keywords: military campaigns, education, economic development, crowding out, state capacity, Latin America
    JEL: I20 N54 O11 O30
    Date: 2023–05
  10. By: Chen, Xiaodong (Xi'an Jiaotong University, China.); Mi, Haoming (Xi'an Jiaotong University, China.); Zhou, Peng (Cardiff Business School)
    Abstract: We develop an endogenous growth model with public consumption and infrastructure services provided by two-tier governments. Growth performance and welfare implication are compared under the centralized and decentralized fiscal federal systems. In general, there is a trade-off between welfare and growth due to conflicts of interest and asymmetric information between central and local governments. By numerical simulations, we show that the optimal fiscal federalism should impose restrictions on expenditure-GDP ratio, rather than on expenditure-budget ratio or central-local expenditure ratio, because expenditure-GDP ratio can align the incentives of the two-tier governments. Furthermore, it is suggested that decentralized fiscal systems are generally superior to the centralized system because the efficiency loss overweighs the agency cost. The model is then applied to analyzing different growth experiences in the West and China by institutional and cultural differences.
    Keywords: Fiscal Federalism; Decentralization; Economic Growth; Social Welfare
    JEL: E61 E62 H1 H5 O41 R5
    Date: 2023–04

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