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on Economic Growth |
| By: | Farroukh, Arafet; Mazioued, Manel; Pédussel Wu, Jennifer |
| Abstract: | We investigate the relationship between remittances inflow and economic growth in a sample of 65 emerging countries over the period 1988-2018 using the semi-parametric panel data model with fixed effects as proposed by Baltagi and Li (2002). Our empirical results show that the effect of remittances inflow on economic growth exhibits a highly nonlinear pattern, which sheds new light on the remittances-growth nexus and provides evidence of a nonlinear relationship. |
| Keywords: | Remittances, Growth, Nonlinear effects, Semi-parametric regression, Panel data, Emerging countries |
| JEL: | C14 O15 F43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:301859 |
| By: | de la Fonteijne, Marcel R. |
| Abstract: | The use of a homogeneous not degree 1 CES production function in a simple economic model under conditions of maximum profit leads to an inconsistency. This paper identifies the root of this problem and provides a solution. Building on this, we propose an improved formulation of the Modern Universal Growth Theory, without focusing on all the difference with Solow, Harrod, Hicks, Uzawa and others, eliminating the errors and limitations inherent in earlier models like those developed by Solow in the 1960s. We conclude that approximate 40 % of the existing theory on economic growth is now rendered invalid. |
| Keywords: | Technical Progress; Growth Model; Maximum Profit Condition; Production Functions; General Technological Progress; Capital-Labor mix; Elasticity of Substitution; Normalized CES Functions, inconsistency; homogeneous CES production function; Total Factor Productivity; DSGE Model; Solow Model; Hicks; Harrod |
| JEL: | E00 E20 E23 E24 |
| Date: | 2024–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121867 |
| By: | Mateo Hoyos (Division of Economics, CIDE) |
| Abstract: | This paper documents that the relationship between tariffs and growth varies significantly with economic structure. Using a panel of 161 countries from 1960 to 2019 and employing a local projections difference-in-differences strategy, I show that tariff reductions are associated with higher GDP per capita in manufacturer countries but lower GDP per capita in nonmanufacturer ones. I then reveal that these results are consistent with, and possibly explained by, heterogeneous changes in productivity, capital accumulation, and the manufacturing share of GDP. The heterogeneity is further confirmed by a comprehensive set of robustness checks. The findings suggest that the recent rise in protectionism in manufacturer countries might end up being harmful, and that existing calls for further liberalization in nonmanufacturers could have unintended consequences. |
| Keywords: | tariffs, trade liberalization, trade policy, growth, economic structure |
| JEL: | F14 F63 O24 O47 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:emc:wpaper:dte638 |
| By: | Dirk Krueger (University of Pennsylvania, CEPR and NBER); Harald Uhlig (University of Chicago, CEPR and NBER) |
| Abstract: | This paper characterizes the stationary equilibrium of a continuous-time neoclassical production economy with capital accumulation in which agents can insure against idiosyncratic income risk by trading state-contingent assets, subject to limited commitment constraints that rule out short-selling. For an N-state Poisson labor productivity process we characterize the household consumption-asset allocation, stationary asset distribution and aggregate capital supply. When production is Cobb-Douglas, productivity takes two values, of which one is zero, and agents have log-utility, the equilibrium interest rate, capital stock and consumption distribution is given in closed form. We therefore provide a tractable alternative to the Aiyagari incomplete markets model. |
| Keywords: | Idiosyncratic Risk, Limited Commitment, Stationary Equilibrium |
| JEL: | E21 D11 D91 G22 |
| Date: | 2024–08–09 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:24-021 |
| By: | Dirk Krueger (University of Pennsylvania, CEPR and NBER); Fulin Li (Texas A&M University); Harald Uhlig (University of Chicago, CEPR and NBER) |
| Abstract: | This paper characterizes the transition dynamics of a continuous-time neoclassical production economy with capital accumulation in which households face idiosyncratic income risk and cannot commit to repay their debt. Therefore, even though a full set of contingent claims that pay out conditional on the realization of idiosyncratic shocks is available, the equilibrium features imperfect insurance and a non-degenerate crosssectional consumption distribution. When household labor productivity takes two values, one of which is zero, and the utility function is logarithmic, we characterize the entire transition dynamics induced by unexpected technology shocks, including the evolution of the consumption distribution, in closed form. Thus, the model constitutes an analytically tractable alternative to the standard incomplete markets general equilibrium Aiyagari (1994) model by retaining its physical environment, but replacing the incomplete asset markets structure with one in which limits to consumption insurance emerge endogenously due to limited commitment. |
| Keywords: | Idiosyncratic Risk, Limited Commitment, Transition Path, MIT Shock |
| JEL: | E21 D11 D91 G22 |
| Date: | 2024–08–15 |
| URL: | https://d.repec.org/n?u=RePEc:pen:papers:24-020 |
| By: | Steven Brakman; Tristan Kohl; Charles van Marewijk; Charles van Marrewijk |
| Abstract: | The availability and composition of labor is fundamental for the structure of international trade. This points towards the importance of demographic transitions that affect trade through, for example, changing capital-labor ratios, urbanization dynamics, or changes in the composition of demand over the life cycle of individuals. Key in this respect is the so-called demographic dividend, which is the potential economic growth stemming from lower dependency ratios. We use the gravity model to link long-run changes of the demographic dividend to changes in the level of world trade for the 21st century. All the scenarios that we distinguish point towards the same conclusion: Compared to the current situation, North America and Europe will no longer be the center of global trade in 2100 due to their aging populations. In contrast, South Asia and Sub-Saharan Africa will experience a substantial increase in their share of world trade throughout the remainder of this century, while the impact of the demographic drag facing China will be most pronounced around 2060. |
| Keywords: | demographic transition, trade, income, gravity model |
| JEL: | F10 J11 O11 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11262 |