nep-gro New Economics Papers
on Economic Growth
Issue of 2023‒10‒02
five papers chosen by
Marc Klemp, University of Copenhagen

  1. At the Right Time:Ramsey-Cass-Koopmans Model with Declining Population By Ichiroh DAITOH; Hiroaki SASAKI
  2. Population Aging and Income Inequality in a Semi-Endogenous Growth Model By Kazuo Mino; Hiroaki Sasaki
  3. Caught in a Trap: Simulating the Economic Consequences of Internal Armed Conflict By Joan Margalef; Hannes Mueller
  4. Non-Exponential Growth Theory By Ryo Horii
  5. Long-term Effects of Temperature Variations on Economic Growth: A Machine Learning Approach By Eugene Kharitonov; Oksana Zakharchuk; Lin Mei

  1. By: Ichiroh DAITOH; Hiroaki SASAKI
    Abstract: This paper investigates how population decline may affect the optimal path in two types of Ramsey-Cass- Koopmans (RCK) model with child rearing costs. An optimal path exists in both models under economically plausible conditions and a new type of optimal path exists in the model where the discount rate is only the time preference rate. Under population decline, the existence and properties of an optimal path depend on the range of the rates of population change, regardless of the child rearing costs. First, when population decline is mild, the optimal path is a saddle-point path converging to a finite steady state, as in the standard RCK model with increasing population. Second, when population decline is faster, the optimal path is a saddle-point path converging, by reversible investment, to a finite steady state (i.e., a balanced growth path (BGP)), at which per capita consumption is larger than per capita income. Third, when population decline is even faster, the optimal path can be an asymptotically BGP, along which both per capita consumption and income keep increasing permanently. We show empirical relevance of these optimal paths by Japanese data and World Population Prospects 2019.
    Keywords: Microcredit; Population decline; dynamic optimization; long-run per capita growth; child rearing cost
    JEL: E21 J11 O11 O41
    Date: 2023–09
  2. By: Kazuo Mino (Institute of Economic Research, Kyoto University); Hiroaki Sasaki (Graduate School of Economics, Kyoto University)
    Abstract: Using a continuous-time overlapping generations model with semi-endogenous growth, this study examines the impact of population aging on inequality. We characterize the stationary distribution of income and wealth among households and investigate how an increase in life expectancy and a decrease in birth rate affect the distributional profile. The numerical experiments revealed that an increase in life expectancy lowers inequality, whereas a decrease in birth rate increases inequality. We also consider extended models with exogenous productivity growth, agents' retirement from labor participation, and endogenous labor supply.
    Keywords: population aging, semi-endogenous growth, overlapping generations model, income and wealth inequality, Pareto distribution
    JEL: E2 O4
    Date: 2023–09
  3. By: Joan Margalef; Hannes Mueller
    Abstract: This study proposes a statistical model to capture the economic impact of the “conflict trap” phenomenon - a period of recurring outbreaks of internal armed conflict. The framework captures conflict dynamics through a discrete-time Markov process. We estimate the transition matrix and link the states to GDP per capita growth distributions through country fixed effects regressions. This allows for simulating the distribution of developmental effects of the conflict trap. We find that the trap has a large detrimental effect on long-term economic development, reaching a relative decline of GDP per capita of over 50% in the most affected countries.
    Keywords: armed conflict, Economic development, conflict trap, economic growth
    JEL: D74 O11 O40
    Date: 2023–09
  4. By: Ryo Horii
    Abstract: The per capita real GDP growth rate has been remarkably stable for many decades in most developed countries. To explain the balanced growth, however, existing endogenous growth theories typically need to assume a knife-edge degree of externality, which is not yet confirmed by micro-level observations. We argue that this puzzle occurs because sustained growth has been commonly understood as exponential growth either in the quantity, quality, or variety of outputs, which is hard to explain without strong assumptions. By explicitly considering the movements of price and quantity of individual goods after their introduction, this paper shows that the observed stability of the real GDP growth rate can be explained under much weaker conditions without relying on the exponential growth of any variable. In particular, we develop an endogenous growth theory where a constant number (not exponentially many) of new goods are introduced per unit of time. Even without externality, a constant GDP growth rate is maintained when the expenditure for older goods shrinks over time so as not to inhibit the expenditure share given on newer goods.
    Date: 2023–09
  5. By: Eugene Kharitonov; Oksana Zakharchuk; Lin Mei
    Abstract: This study investigates the long-term effects of temperature variations on economic growth using a data-driven approach. Leveraging machine learning techniques, we analyze global land surface temperature data from Berkeley Earth and economic indicators, including GDP and population data, from the World Bank. Our analysis reveals a significant relationship between average temperature and GDP growth, suggesting that climate variations can substantially impact economic performance. This research underscores the importance of incorporating climate factors into economic planning and policymaking, and it demonstrates the utility of machine learning in uncovering complex relationships in climate-economy studies.
    Date: 2023–06

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