nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒06‒12
four papers chosen by
Marc Klemp
University of Copenhagen

  1. Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020 By Ellora Derenoncourt; Chi Hyun Kim; Moritz Kuhn; Moritz Schularick
  2. Health performance and economic growth in sub-Saharan Africa: new evidence based on quantile regressions By Simplice A. Asongu; Nicholas M. Odhiambo
  3. From Population Growth to TFP Growth By Hiroshi Inokuma; Juan M. Sanchez
  4. The Historical Importance of Growth and Inflation in Reducing High UK Public Debt Ratios By Brooks, D.; Needham, D.

  1. By: Ellora Derenoncourt; Chi Hyun Kim; Moritz Kuhn; Moritz Schularick
    Abstract: The racial wealth gap is the largest of the economic disparities between Black and white Americans, with a white-to-Black per capita wealth ratio of 6 to 1. It is also among the most persistent. In this paper, we construct the first continuous series on white-to-Black per capita wealth ratios from 1860 to 2020, drawing on historical census data, early state tax records, and historical waves of the Survey of Consumer Finances, among other sources. Incorporating these data into a parsimonious model of wealth accumulation for each racial group, we document the role played by initial conditions, income growth, savings behavior, and capital returns in the evolution of the gap. Given vastly different starting conditions under slavery, racial wealth convergence would remain a distant scenario, even if wealth-accumulating conditions had been equal across the two groups since Emancipation. Relative to this equal-conditions benchmark, we find that observed convergence has followed an even slower path over the last 150 years, with convergence stalling after 1950. Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped.
    Keywords: Wealth accumulation; Wealth inequality; Savings and asset prices; Racial wealth gap
    JEL: J15 N11 N12
    Date: 2022–06–10
  2. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: The present study investigates the nexus between health performance dynamics and economic growth in 43 countries in sub-Saharan Africa for the period 2004-2018. Four health performance dynamics are used, notably: total life expectancy, male life expectancy, female life expectancy and risk of maternal death. The empirical evidence is based on quantile regressions in order to put into perspective the conditional distribution of economic growth. The following findings are established: (i) total life expectancy and male life expectancy increase economic growth exclusively in the 10th and 90th quantiles of economic growth; (ii) female life expectancy boosts economic growth in the 90th quantile of economic growth and (iii) the risk of maternal death reduces economic growth in the 75th and 90th quantiles of economic growth. Policy implications are discussed. The study complements the literature on the nexus between health performance and economic growth by assessing the nexuses throughout the conditional distribution of economic growth.
    Keywords: health performance; economic growth; sub-Saharan Africa; quantile regression
    JEL: D31 I10 I32 K40 O55
    Date: 2023–01
  3. By: Hiroshi Inokuma; Juan M. Sanchez
    Abstract: Using a firm-dynamics model that has been extended to include endogenous growth, we examine how population growth influences total factor productivity (TFP) growth. The most important theoretical result is that the shape of a business's productivity life-cycle profile determines the direction of the impact of population growth on TFP growth. Following that, the model is calibrated for Japan and the United States. The main finding of examining balanced growth paths (BGPs) with various rates of population growth is that the effect on TFP growth is sizable. Japan's expected decline in population growth from 1960 to 2060, for example, implies a 0.36-0.59 percentage point reduction in TFP growth over the long term. Finally, we compute transitions between BGPs and discover that changes in TFP growth are slow in reaction to population growth changes due to two short-run counterbalancing factors.
    Keywords: growth; firms dynamics; demographics; productivity; total factor productivity (TFP)
    JEL: J11 O33 O41
    Date: 2023–03–27
  4. By: Brooks, D.; Needham, D.
    Abstract: This paper employs an extended accounting framework to estimate the role of real GDP growth and inflation in reducing the UK public debt to GDP ratio following the Napoleonic Wars and the two World Wars. Traditional debt accounting methods do not quantify the impact of growth on the budget balance and therefore underestimate the importance of growth. The extended accounting framework captures the impact of growth on the budget balance. Applying the extended approach to the UK shows that growth matters more than previously acknowledged in reducing the historical public debt ratio, especially following the Second World War. Inflation following the Second World War had a sizable but lesser impact on the debt ratio compared to real growth.
    Date: 2023–05–23

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