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on Economic Growth |
| By: | Juin-Jen Chang (Academia Sinica,); Jang-Ting Guo (Department of Economics, University of California Riverside); Wei-Neng Wang (National Taichung University of Science and Technology) |
| Abstract: | This paper examines the theoretical and quantitative interrelations between progressive taxation and after-tax income inequality within a one-sector endogenous growth model. In a simplified two-type version of the macroeconomy, we analytically show that higher fiscal progression leads to less unequal long-run gross/net income distributions, provided the general-equilibrium elasticity of aggregate labor supply surpasses a specific negative threshold. In addition, numerical simulations find that our calibrated economy under useless or useful government spending, together with (i) agents' intertemporal elasticity of consumption substitution taking on the highest empirically-plausible value and (ii) a lower-than-unitary elasticity of capital-labor substitution in production, is able to generate qualitatively as well as quantitatively realistic long-run disposable-income inequality effects of changing the tax progressivity vis-Ã -vis recent panel estimation results. |
| Keywords: | Progressive Taxation; Income Inequality; Endogenous Growth. |
| JEL: | D31 E13 H30 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ucr:wpaper:202503 |
| By: | Ziesemer, Thomas (Mt Economic Research Inst on Innov/Techn, RS: GSBE MORSE) |
| Abstract: | The empirical investigation of properties of an endogenous growth model by Huang, Lai, and Peretto (2023) in this paper confirms important assumptions and results of the model for OECD countries. Labour-augmenting technical change is enhanced through private and public R&D stocks in FMOLS and DOLS mean-group estimations, and pooled mean-group (PMG) estimation, also when adding the number of enterprises. The CES spillover functions in the growth models functions for R&D stock dynamics are supported through nonlinear estimation under the assumptions of identical or different spillover parameters for private and public R&D. We suggest strong public-to-private spillovers and weak private-to-public spillovers as well as high elasticities of substitution for private-public R&D stocks for private R&D processes and low CES for public R&D processes. We confirm the existence of private-public researcher interaction effects in the private R&D knowledge growth function and provide tentative evi dence for the linear relation between public researchers and firm-level R&D and the hump-shaped relation between public and private researchers (both as % labour force). A vector-autoregressive (VAR) panel model in growth rates produces results, which are in accordance with the impact of public R&D cuts on the steady state and the transitional dynamics of the HLP model. |
| JEL: | O41 O38 O47 |
| Date: | 2024–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:unm:unumer:2024002 |
| By: | Ryo HORII; Katsunori Minami |
| Abstract: | This paper examines the growth effects of R&D subsidies and public-funded basic research in an R&D-based endogenous growth model under circumstances where the government cannot raise taxes. We show that when individuals have enough life-cycle saving motives and R&D productivity is sufficiently high, g > r holds in equilibrium and the government can finance the required expenses while perpetually rolling over the debt. Whenever possible, debt-financed R&D subsidies always enhance short-run growth. However, long-term growth is promoted only when the initial g−r gap is wide enough. Even when the long-term effect is negative, the economy may benefit from the increased GDP during a long transition to the new BGP. We confirmed that the social return to R&D is always higher than the growth rate even though g > r. In an extended model, we examine the effect of enhancing public-funded basic research and find that it is particularly effective for low-growth economies. This paper examines the growth effects of R&D subsidies and public-funded basic research in an R&D-based endogenous growth model under circumstances where the government cannot raise taxes. We show that when individuals have enough life-cycle saving motives and R&D productivity is sufficiently high, g > r holds in equilibrium and the government can finance the required expenses while perpetually rolling over the debt. Whenever possible, debt-financed R&D subsidies always enhance short-run growth. However, long-term growth is promoted only when the initial g−r gap is wide enough. Even when the long-term effect is negative, the economy may benefit from the increased GDP during a long transition to the new BGP. We confirmed that the social return to R&D is always higher than the growth rate even though g > r. In an extended model, we examine the effect of enhancing public-funded basic research and find that it is particularly effective for low-growth economies. This paper examines the growth effects of R&D subsidies and public-funded basic research in an R&D-based endogenous growth model under circumstances where the government cannot raise taxes. We show that when individuals have enough life-cycle saving motives and R&D productivity is sufficiently high, g > r holds in equilibrium and the government can finance the required expenses while perpetually rolling over the debt. Whenever possible, debt-financed R&D subsidies always enhance short-run growth. However, long-term growth is promoted only when the initial g−r gap is wide enough. Even when the long-term effect is negative, the economy may benefit from the increased GDP during a long transition to the new BGP. We confirmed that the social return to R&D is always higher than the growth rate even though g > r. In an extended model, we examine the effect of enhancing public-funded basic research and find that it is particularly effective for low-growth economies. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:cnn:wpaper:25-003e |
| By: | Katsunori Minami; Ryo Horii |
| Abstract: | This paper examines the growth effects of R&D subsidies and public-funded basic research in an R&D-based endogenous growth model under circumstances where the government cannot raise taxes. We show that if individuals have enough life-cycle saving motives and R&D productivity is sufficiently high, g>r holds in equilibrium, and the government can finance the required expenses while perpetually rolling over the debt. Whenever possible, debt-financed R&D subsidies always enhance short-run growth. However, long-term growth is promoted only when the initial g-r gap is wide enough. Even when the long-term effect is negative, the economy may benefit from the increased GDP during a long transition to the new BGP. We confirmed that the social return to R&D is always higher than the growth rate despite g>r. In an extended model, we examine the effect of enhancing public-funded basic research and find that it is particularly effective for low-growth economies. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1258r |
| By: | Costa, Dora; Bygren, Lars Olov; Graf, Benedikt; Karlsson, Martin; Price, Joseph |
| Abstract: | Explanations for the West’s escape from premature mortality have focused on chronic malnutrition or income and on public health or state capacity. We argue that by ignoring the multigenerational effects of variance in ancestors’ harvests, we are underestimating the contribution of modern economic growth to the escape from early death at older ages. Using a newly constructed multigenerational dataset for Sweden, we show that grandsons’ longevity was strongly linked to spatial shocks in paternal grandfathers’ yearly harvest variability when agricultural productivity was low and market integration was limited. We reason that an epigenetic mechanism is the most plausible explanation for our findings. We posit that the removal of trade barriers, improvements in transportation, and agricultural innovation reduced harvest variability. We contend that for older Swedish men (but not women) born 1830-1909 this reduction was as important as decreasing contemporaneous infectious disease rates and more important than eliminating exposure to poor harvests in-utero. |
| Keywords: | JEL classification: I15, J11, N33 |
| Date: | 2025–01–22 |
| URL: | https://d.repec.org/n?u=RePEc:ajt:wcinch:82948 |
| By: | Dietze-Hermosa, David |
| Abstract: | This paper approaches the discussion of the Byzantine economic revival of the 11th century using a qualitative comparative methodology (S Greece and S Italy) paired with descriptive statistics, and by including the heretofore under-discussed economy of Byzantine Italy. By doing so, it reveals and confirms the economic principles, associated with the Smithian growth framework, underlying said economic revival, namely, extensive economic growth followed by intensive economic growth brought on by demand-induced industrialisation and specialisation. This process was facilitated in the Byzantine empire by elite investment, monetisation and, in latter decades of the 11th century, trade liberalisation. This is evident with both southern Greece and southern Italy’s experiences with agricultural (especially olive oil and wine) and sericultural specialisation, and with the development of the southern Greek textile (especially silk) and pottery industries. Thus, the Byzantine economy is confirmed as experiencing sustained Smithian growth in the 11th century. |
| JEL: | N14 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:wpaper:127150 |
| By: | Stefano Bosi (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay); Carmen Camacho (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Thai Ha-Huy (EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay) |
| Abstract: | In a simple discrete-time version of Lucas (1988) we find that the Balanced Growth Path (BGP) is always the unique optimal planner's solution: with linear or strictly concave production functions, with unbounded utility functions, with or without human capital depreciation. When the "speed" of human capital accumulation is high, the optimal working time is constant and below its upper bound. Capital grows at a constant factor, but degrowth is also possible when this factor is less one (under positive capital depreciation). When this speed is low, optimal working time is at its boundary and capital declines at its depreciation factor (degrowth). |
| Keywords: | Human capital, Balanced growth path |
| Date: | 2023–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:pseptp:halshs-04805609 |
| By: | Michael R. Douglas; Sergiy Verstyuk |
| Abstract: | We study long-run progress in artificial intelligence in a quantitative way. Many measures, including traditional ones such as patents and publications, machine learning benchmarks, and a new Aggregate State of the Art in ML (or ASOTA) Index we have constructed from these, show exponential growth at roughly constant rates over long periods. Production of patents and publications doubles every ten years, by contrast with the growth of computing resources driven by Moore's Law, roughly a doubling every two years. We argue that the input of AI researchers is also crucial and its contribution can be objectively estimated. Consequently, we give a simple argument that explains the 5:1 relation between these two rates. We then discuss the application of this argument to different output measures and compare our analyses with predictions based on machine learning scaling laws proposed in existing literature. Our quantitative framework facilitates understanding, predicting, and modulating the development of these important technologies. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.17894 |
| By: | Mark Setterfield (Department of Economics, New School For Social Research, USA) |
| Abstract: | Motivated by extensions to the neo-Goodwinian framework pioneered by Lance Taylor (and others), this paper investigates the two-way interaction between growth and distribution in a `Marx-Keynes-Schumpeter' (MKS) system in which the principle of effective demand, distributive conflict, and technical change are the (interacting) drivers of capitalist macrodynamics. A particular concern is with the effects of distribution on both the actual (demand-led) and natural rates of growth, and the reconciliation of these growth rates in a steady-state growth configuration consistent with a constant but indeterminate rate of employment. A baseline model is developed in which the medium-run equilibrium rate of growth is profit-led by hypothesis, but the steady-state long-term rate of growth is nevertheless wage-led. This baseline result is then shown to be generally robust to the introduction of different sources of technical change and both the demand- and supply-side effects of human capacities accumulation (whether through unpaid domestic production or expenditure on marketed services). The paper ends with suggestions for further research. These include extending the model to incorporate interactions between the economy and the environment in the manner suggested by Lance Taylor in his later work. |
| Keywords: | Wage-led growth, profit-led growth, natural rate of growth, technical change, human capacities |
| JEL: | B54 E11 E12 E24 E25 O41 O44 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:new:wpaper:2502 |
| By: | Ngoc-Sang Pham; Alexis Akira Toda |
| Abstract: | We revisit the classic paper of Tirole "Asset Bubbles and Overlapping Generations" (1985, Econometrica), which shows that the emergence of asset bubbles solves the capital over-accumulation problem. While Tirole's main insight holds with pure bubbles (assets without dividends), we argue that his original analysis with a dividend-paying asset contains some issues. We provide a fairly complete analysis of Tirole's model with general dividends such as equilibrium existence, uniqueness, and long-run behavior under weaker but explicit assumptions and complement with examples based on closed-form solutions. Some of the claims in Tirole (1985) require qualifications including (i) after the introduction of an asset with negligible dividends, the economy may collapse towards zero capital stock ("resource curse") and (ii) the necessity of bubbles is less clear-cut. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.16560 |