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on Economic Growth |
| By: | Gregory Casey; Gregory P. Casey |
| Abstract: | I construct and analyze a growth model in which technical change can increase unemployment. I first analyze the forces that deliver a constant steady state unemployment rate in this setting. Labor-saving technical change increases unemployment, which lowers wages and creates incentives for future investment in labor-using technologies. In the long run, this interaction generates a balanced growth path that is observationally equivalent to that of the standard neoclassical growth model, except that it also incorporates a positive steady state level of unemployment and a falling relative price of investment. I also study the effects of a permanent increase in the ability of R&D to improve labor-saving technologies. In the long run, this change leads to faster growth in output per worker and wages, but it also yields higher unemployment and a lower labor share of income. In the short run, this change exacerbates existing inefficiencies and slows economic growth. |
| Keywords: | growth, unemployment, directed technical change |
| JEL: | E24 O33 O40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11214 |
| By: | Thiago Christiano Silva; Paulo Victor Berri Wilhelm; Diego Raphael Amancio |
| Abstract: | This study examines the effects of deglobalization trends on international trade networks and their role in improving forecasts for economic growth. Using section-level trade data from more than 200 countries from 2010 to 2022, we identify significant shifts in the network topology driven by rising trade policy uncertainty. Our analysis highlights key global players through centrality rankings, with the United States, China, and Germany maintaining consistent dominance. Using a horse race of supervised regressors, we find that network topology descriptors evaluated from section-specific trade networks substantially enhance the quality of a country's economic growth forecast. We also find that non-linear models, such as Random Forest, eXtreme Gradient Boosting, and Light Gradient Boosting Machine, outperform traditional linear models used in the economics literature. Using SHapley Additive exPlanations values to interpret these non-linear model's predictions, we find that about half of the most important features originate from the network descriptors, underscoring their vital role in refining forecasts. Moreover, this study emphasizes the significance of recent economic performance, population growth, and the primary sector's influence in shaping economic growth predictions, offering novel insights into the intricacies of economic growth forecasting. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:597 |
| By: | Peter Grajzl; Peter Murrell |
| Abstract: | Most development models emphasize a growth in the scope of individual choice as the law becomes impartial, relevant to all. An early expression of this conceptualization appeared in the 19th century, when Henry Maine coined his celebrated dictum that progressive societies move from status to contract. We conduct a macro-historical quantitative inquiry into Maine's dictum using corpora on 16th- to 18th-century caselaw and print culture. Upon conceptualizing the notions of contract and status, we train word embeddings on each corpus and produce time series of emphases on contract, status, and contract versus status. Only caselaw exhibits an increasing emphasis on contract versus status, and even that trend is discernible only before the Civil War. After 1660 in caselaw, emphases on both contract and status increase, with no trend in contract versus status. After 1660, caselaw trends reflect the increasing importance of equity compared to common-law. In print culture, religion consistently emphasizes contract over status, while politics exhibits a downward-trending emphasis on contract versus status. VAR estimates reveal that the applicable ideas in caselaw and print culture coevolved. |
| Keywords: | contract versus status, Henry Maine, early-modern England, machine learning, caselaw, print culture |
| JEL: | K10 Z10 N00 P10 C80 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11246 |
| By: | Ziho Park |
| Abstract: | A large body of literature in economics and political science examines the impact of democracy and political freedoms on various outcomes using cross-country comparisons. This paper explores the possibility that any positive impact of democracy observed in these studies might be attributed to powerful democratic nations, their allies, and international organizations treating democracies more favorably than nondemocracies, a concept I refer to as democratic favor channel. Firstly, after I control for being targeted by sanctions from G7 or the United Nations and having military confrontations and cooperation with the West, most of the positive effects of democracy on growth in cross-country panel regressions become insignificant or negatively significant. Secondly, using the same empirical specification as this literature for demonstrating intermediating forces, I show that getting sanctioned, militarily attacked, and not having defense cooperation with the West are plausible channels through which democracy causes growth. Lastly, in the pre-Soviet-collapse period, which coincides with the time when democracy promotion was less often used as a justification for sanctions, the impact of democracy on GDP per capita is already weak or negative without any additional controls, and it becomes further negative once democratic favor is controlled. These findings support the democratic favor channel and challenge the idea that the institutional qualities of democracy per se lead to desirable outcomes. The critique provided in this paper applies to the broader comparative institutions literature in social sciences and political philosophy. |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.05059 |