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on Economic Growth |
| By: | Li, Hao; Wang, Gaowang; Yang, Liyang |
| Abstract: | We develop an endogenous growth model where data drives innovation. In this model, big data fosters quality improvements by influencing the likelihood and magnitude of successful quality-enhancing innovations. It also promotes variety innovation through the efficient allocation of labor as a fixed cost, ultimately driving long-run economic growth. The social planner reduces the welfare costs associated with monopoly production and internalizes the externalities present in decentralized economies. As a result, the optimal growth rate exceeds the equilibrium growth rates under two data property rights regimes. Data property rights play a crucial role in determining long-run growth and steady-state welfare, which depend largely on two key model parameters: the weight for privacy and the frequency of creative destruction. This model also explores the interactions between quality innovation and variety innovation. |
| Keywords: | data as innovation; endogenous growth; data property rights; interactions between quality innovation and variety innovation |
| JEL: | E1 O3 O41 |
| Date: | 2024–10–13 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122388 |
| By: | Santiago Caicedo; Jeremy Pearce |
| Abstract: | This paper studies how the speed-quality tradeoff in innovation interacts with firm dynamics, concentration, and economic growth. Empirically, we document long-run trends in the increasing speed of innovation alongside declining quality at large firms. Leveraging variation from an exogenous policy change, we document the existence of the speed-quality tradeoff both at the firm and aggregate level. We develop an endogenous growth model that incorporates the speed-quality tradeoff and show that allocating less labor towards speed increases growth, particularly in the presence of private benefits to innovation and spillovers from heterogeneous innovations. We quantify the model to link firms’ decisions across speed and quality to aggregate outcomes. Quantitatively, the recent growth slowdown is mainly due to changes in the innovation production function, while the allocation of inventors between speed and quality within firms has a modest impact. When spillovers across firms are taken into account, the effect becomes significantly larger; the shift to speed over the last 30 years explains up to one-quarter of the decrease in growth. |
| Keywords: | innovation; economic growth; slowdown; inventors; firm dynamics |
| JEL: | J63 O30 O31 O33 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:98928 |
| By: | Finocchiaro, Daria (Research Department, Central Bank of Sweden); Weil, Philippe (Université libre de Bruxelles and CEPR) |
| Abstract: | We investigate the growth-finance nexus in an endogenous growth model with search frictions and congestion effects in credit and innovation markets. The interplay between these two frictions generates a nonlinear relationship between finance and growth. Financial development eases the financing of innovation but can exacerbate bottlenecks in R&D. In a calibration close to the U.S. economy, finance has a negative impact on growth. This effect is quantitatively small– consistent with the observation that, in the last century, most developed economies have experienced an expansion of the financial sector and almost constant growth rates of GDP. |
| Keywords: | Growth; Finance; Search frictions; Technology; Innovation |
| JEL: | E51 G24 O40 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:rbnkwp:0442 |
| By: | Mickael Melki; Hillel Rapoport; Enrico Spolaore; Romain Wacziarg |
| Abstract: | We argue that migrants played a significant role in the diffusion of the demographic transition from France to the rest of Europe in the late 19th century. Employing novel data on French immigration from other European regions from 1850 to 1930, we find that higher immigration to France translated into lower fertility in the region of origin after a few decades - both in cross-region regressions for various periods, and in a panel setting with region fixed effects. These results are robust to the inclusion of a variety of controls, and across multiple specifications. We also find that immigrants who themselves became French citizens achieved lower fertility, particularly those who moved to French regions with the lowest fertility levels. We interpret these findings in terms of cultural remittances, consistently with insights from a theoretical framework where migrants act as vectors of cultural diffusion, spreading new information, social norms and preferences pertaining to modern fertility to their regions of origin. |
| Keywords: | migration, fertility control, social influence, cultural change, diffusion |
| JEL: | J13 F22 N13 O40 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11357 |
| By: | João Ferreira do Amaral |
| Abstract: | The purpose of this paper is to study the relations between the concept of technical progress of a certain type (technological wave with technical progress embodied in innovative capital) and the concept of surplus-value of the stock of equipment. For that purpose we define an income function instead of a production function. |
| Keywords: | economic growth; digital revolution; technological progress; innovation. |
| JEL: | E10 E11 E22 N10 O30 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03482024 |
| By: | Smith, Cory (University of Maryland (AREC)); Kulka, Amrita (University of Warwick) |
| Abstract: | We study the process of long-run urban growth using a unique setting of close elections that determined “county seats†(capitals) in the frontier United States. Employing a regression discontinuity design, we show that winning towns rapidly became the economic and population centers of their counties as new migrants coordinated on them as destinations. This coordination was largest in the early years of a county’s history, but limited in later decades. Using generalized random forests, we show that the economic changes were not zero sum locally: specific choices of county seat could increase long-run county population and income. As county administration was limited in this era, the public sector did not play a substantial role in this growth. Instead, these results illustrate how a political process can select spatial equilibria through a shock that is neither related to locational fundamentals nor confers direct productivity advantages on the location. |
| Keywords: | JEL Classification: |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:724 |
| By: | Hiroaki Ishiwata (Pacific Consultants Co., Ltd., Tokyo, Japan); Masashi Sakamoto (Tohoku University); Makoto Ikeda (Kobe University); Venkatachalam Anbumozhi (Economic Research Institute for ASEAN and East Asia (ERIA)) |
| Abstract: | This study aims to develop and utilise a multi-regional economic growth model that can take into account flood damage and investment in disaster risk reduction, and, through case studies in Viet Nam, quantitatively analyse the long-term effects of investment in disaster risk reduction on the national and local economy, as well as the optimal scale and timing of investments in flood protection, to gain a better overview of these factors. The results indicate that additional investment in disaster risk reduction could stimulate economic growth, and that the optimal range of the disaster risk reduction budget rate was around 0.3% to 0.5% of GDP, assuming a constant budget rate throughout the total 25-year calculation period. In the case of a variable disaster risk reduction budget rate, we observed that a variable budget rate that gradually reduces the disaster risk reduction budget rate from a higher level than the current rate could further promote economic growth than if the budget rate were fixed. In both cases, we verified that with excessive investment in disaster risk reduction, the high tax burden had the risk of reducing investment in production capital and lead to stagnating economic growth. By region, the long-term effects of investment in disaster risk reduction were most seen in the Central region, where the rate of flood damage is the highest. |
| Keywords: | disaster risk reduction investment, extensive flood risk, multi-regional economic growth model, Viet Nam |
| JEL: | C68 E17 H21 H54 O11 O41 O53 R12 |
| Date: | 2024–02–02 |
| URL: | https://d.repec.org/n?u=RePEc:era:wpaper:dp-2023-24 |