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on Economic Growth |
| By: | Sarracino, Francesco; Slater, Giulia |
| Abstract: | Countries where interpersonal trust is higher have, on average, higher gross domestic product (GDP) per capita. Does this mean that economic growth is associated to growing trust over time? We review the literature addressing this question, and provide updated empirical evidence on the effects of economic growth on trust over time, a well-established measure of social capital, widely considered in economic studies. We use country panel data from the Penn World Tables and information on people trusting others from the Survey Data Recycling (SDR) v.2.0 database, the largest source of data on trust currently available. Results confirm the positive cross-sectional relation found in previous studies. However, over time trust decreases when GDP grows. A number of robustness checks and a test of causality support this conclusion. The negative relationship between economic growth and trust over time affects prevalently unequal, rich countries. This is possible because growing income inequality increases the chances for social comparisons, which substitute trust in individuals’ utility functions. Additionally, income inequality hampers cooperation and cohesiveness in favour of competition, and increases the probability of social unrest. This suggests that the quality of growth matters: interpersonal trust decreases when economic growth is accompanied by income inequalities. |
| Keywords: | trust, economic growth, panel data, paradox, inequality |
| JEL: | I38 O15 O40 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120053&r=gro |
| By: | Rangan Gupta (Department of Economics, University of Pretoria, Private Bag X20, Hatfield 0028, South Africa); Sarah Nandnaba (Department of Economics, Ecole normale superieure (ENS) Paris-Saclay, 91190 Gif-sur-Yvette, France); Wei Jiang (School of Economics, University of Kent, Canterbury, Kent, CT2 7PE, United Kingdom) |
| Abstract: | We develop an overlapping generations endogenous growth model characterized by climate change, with the latter being specified as a fraction of output lost due changes in temperature anomalies. We show that growth dynamics arise in this model when changes in temperature anomalies is a positive function current economic growth, with this theoretical specification motivated through extensive empirical analyses involving 167 countries over a long span of historical data covering 1851 to 2018. In particular, two distinct oscillatory growth dynamics emerge: one convergent and the other divergent, contingent on the strength of the response of global warming, i.e., changes in temperature anomalies to current economic growth. Our theoretical results suggest that policy makers should be cognizant of the fact that unless economic growth is “green†, rapid global warming can would put economies in a fluctating divergent balanced growth. |
| Keywords: | Climate change, endogenous growth, dynamics |
| JEL: | C23 O41 Q54 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202404&r=gro |
| By: | Emmanuelle Augeraud-Véron (GREThA, University of Bordeaux); Raouf Boucekkine (CUT, Rennes School of Business, France); Fausto Gozzi (Dipartimento di Economia e Finanza, LUISS Guido Carli, Rome); Alain Venditti (Aix-Marseille Univ., CNRS, AMSE, Marseille, France) |
| Abstract: | We present an overview of selected contributions of the Journal of Mathematical Economics' authors in the last half century. We start with the classical optimal growth theory within a benchmark multisector model and outline the successive developments in the analysis of this model, including the turnpike theory. Different refinements of the benchmark are considered along the way. We after survey the abundant literature on endogenous fluctuations in two-sector models. We conclude with two strong trends in the recent growth literature: green growth and infinite-dimensional growth models. |
| Keywords: | Growth theory, multisector models, turnpike theory, green growth, infinite-dimensional growth models, optimization |
| JEL: | C60 C61 O41 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2406&r=gro |
| By: | Daron Acemoglu (Massachusetts Institute of Technology); Philippe Aghion (Collège de France; INSEAD; London School of Economics and Political Science); Lint Barrage (ETH Zurich); David Hémous (University of Zurich) |
| Abstract: | To combat climate change without sacrificing long-term economic growth, innovation must be redirected toward green technologies. The authors review recent literature that has developed a directed technical change framework where innovation can be endogenously targeted either toward fossil-fuel enhancing technologies or clean energy sources (such as renewables). They provide empirical evidence of path dependence in firms' choice between green and dirty innovation. They then draw implications of this path dependence for the design of environmental policy and for economic growth. In particular, they show that their framework has distinctive implications regarding unilateral environmental policies, international cooperation, the use of intermediate energy sources such as natural gas, and the role of civil society. |
| Keywords: | green growth, endogenous growth, directed technical change, climate change, innovation, environmental policy |
| JEL: | F18 O30 O41 O44 Q43 Q54 Q55 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:iie:wpaper:wp23-14&r=gro |
| By: | Mr. Serhan Cevik |
| Abstract: | The rise of fintech is revolutionizing the financial landscape, with products and companies advancing innovative technologies to improve and automate financial services. In this paper, I use a novel dataset and implement a dynamic modelling to investigate the relationship between fintech and economic growth in a panel of 198 countries over the period 2012–2020. This cross-country approach—utilizing direct measures of fintech and dealing with potential endogeneity—provides interesting empirical insights. First, the impact magnitude and statistical significance of fintech on real GDP per capita growth depend on the type of instrument (digital lending vs. digital capital raising). While digital lending has a statistically significant positive effect on economic growth, digital capital raising has a large but insignificant effect. Second, the overall impact of fintech including all instruments is positive and statistically significant because of the overwhelming share of digital lending in total. Finally, while the positive relationship between fintech and growth is stronger in magnitude in advanced economies, the statistical significance of this effect is higher in developing countries. Taken as a whole, these results confirm Schumpeter’s prediction that financial innovation can promote growth, but not every type of fintech becomes an accelerator. |
| Date: | 2024–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2024/020&r=gro |
| By: | Costa, Carlos Eugênio da; Rodrigues, Artur |
| Abstract: | We revisit the efficiency-equity trade-off of optimal tax theory by emphasizing the consequences of increased progressivity on growth. We use an endogenous growth framework that considers both the decision to become a researcher and the effort established entrepreneurs make to improve their products. We find that the optimal level or progressivity is lower than the current one but that welfare gains are moderate – CEV ≈ 0.5%. However, if one disregards the growth impact one would prescribe a substantially higher level of progressivity at significant welfare cost – CEV ≈ −9%. |
| Date: | 2024–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:839&r=gro |
| By: | KATAGIRI Mitsuru |
| Abstract: | This study investigates the effects of employment protection legislation (EPL) on entrepreneurship, firm dynamics, and economic growth in a general equilibrium model that incorporates endogenous Schumpeterian growth. The model implies that more stringent EPL encourages households to accumulate more firm-specific human capital, which raises the opportunity cost to start a business. Using Japanese firm- and household-level microdata to calibrate parameter values, the quantitative exercise reveals that EPL reform aimed at its elimination could stimulate entrepreneurship in the household sector, thus boosting economic growth through more creative destruction in the firm sector. A partial equilibrium model that disregards the general equilibrium effects can overestimate or underestimate the policy effects of the EPL reform on entrepreneurship and economic growth. Policies that directly support firm entries or incumbents' research-and-development investment have limited impacts on economic growth as long as stringent EPL exists. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24022&r=gro |
| By: | Doojav, Gan-Ochir; Baatarkhuu, Munkhbayar |
| Abstract: | This paper examines the non-linear effects of public debt on economic growth in Asian developing economies using panel Generalized Method of Moments (GMM) regressions and panel vector autoregression (VAR) models. We find a statistically significant non-linear effect of public debt (as a percent of GDP) on GDP per capita growth, with a turning point at 52 percent and 50 percent of GDP for all Asian developing and Asian coastal developing economies, respectively. It is found that asymmetric mutual feedback effects exist between the growth and the public debt depending on the public debt level. The two-way effects are statistically significant and more evident when the public debt exceeds its threshold level. Our results also show evidence of geographical (cross-country) heterogeneity in the mutual feedback effects. These findings have important policy implications, including the need to use geographic (or region)-specific debt threshold levels and asymmetric response coefficients in public debt policy analysis. |
| Keywords: | Public debt, economic growth, Asian developing countries, sustainability of debt, non-linearity, geographical heterogeneity |
| JEL: | C23 E62 F34 H63 O11 R11 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120050&r=gro |
| By: | Song, Teresa |
| Abstract: | South Korea’s economic growth (EG) miracle has been a source of discussion since the 1990s. The assumption of relatively equitable distribution of resources should be contested, as a growing base of evidence shows that human development (HD) and gender parity improvements are not automatic. To that effect, this dissertation asks the question of why the gender equality index (GEI), a subset of the historical index of human development (HIHD) lagged, despite GDP per capita and HIHD growth. It is hypothesised that the widening of the gender pay gap (GPG) during 1976-1996, was predominantly responsible for worsening the GEI, leading to the divergence between GDP, HIHD and GEI. The occupational wage survey (OWS) conducted annually since 1971, by the South Korean Ministry of Labour is used to perform econometric analysis to understand the GPG time trend and how it was impacted by marital status and the introduction of trade unions. The results demonstrate that whilst earnings increased, the GPG widened, with marital status and trade unions offering explanations for increased discrimination. My findings provide support for analysing the benefits of redistribution on a gendered basis and making a case for gender equality improvements on both an intrinsic and instrumental level. Much further research can be done in this area, especially in the quantification of culture and its ongoing legacy on societal gendered roles in determining GPG inter alia. |
| Keywords: | gender pay gap; gender equality; economic growth; human development; South Korean growth; marital status; trade unions |
| JEL: | N0 R14 J01 |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122006&r=gro |