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on Economic Growth |
| By: | Heng-fu Zou (The World Bank; Institute for Advanced Study, Wuhan University; China Economics and Management Academy, Central University of Finance and Economics); Wei Liang (China Economics and Management Academy, Central University of Finance and Economics) |
| Abstract: | We explores the intricate relationship between culture, liberal ideas, and economic growth, presenting a formal framework to better understand the drivers behind the Great Enrichment. It highlights how core values such as liberty, dignity, equality, and individualism play a pivotal role in enhancing human welfare and fostering technological innovation. By delving into these liberal principles, the study sheds light on the mechanisms through which societies can achieve sustained economic development. |
| Keywords: | Liberal Ideas, Great Enrichment, Liberty, Dignity, Equality, Entrepreneurship, Economic Growth, Development |
| JEL: | D63 E20 E22 H56 L26 O10 O30 O40 P48 |
| Date: | 2025–02–11 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:737 |
| By: | Jesús Arellano-González; Miriam Juárez-Torres |
| Abstract: | In this paper, we estimate the effect of temperature on the economic activity of Mexico using 42 years of quarterly panel data on economic growth at the state level. Our findings reveal a concave relationship between quarterly economic growth and quarterly average temperature that is maximized at around 20 degrees Celsius. Average temperatures above this level are associated with lower economic growth rates with sharper declines for agricultural and low-income states. Temperature affects aggregate economic growth mainly through the effect it has on the growth of the primary and secondary sectors. The findings of this paper suggest that by 2100, in the absence of adaptation and under an intermediate scenario of climate change, global warming might cause a statistically significant reduction of quarterly economic growth. |
| Keywords: | Quarterly economic growth;Temperature;Climate change;Panel data |
| JEL: | O44 Q51 Q54 R11 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdm:wpaper:2025-02 |
| By: | Damián Pierri (Universidad Autónoma de Madrid); Fernando García-Belenguer (Universidad Autónoma de Madrid) |
| Abstract: | Economies experience periods of countercyclical borrowing in which the stock of external private debt is negatively correlated with output growth rates but also undergo periods of procyclical borrowing in which debt shows a positive correlation with growth.We find that a group of middle-income countries spend around one-half of the time in each of the two states. Weconstruct an open economy model with endogenous growth and stochastic productivity shocks to investigate this evidence, exhibiting a stochastic balanced growth path.We prove the existence of an invariant distribution for the debt-capital ratio and characterize its dynamical properties, stating the conditions under which the normalized debt stock is sustainable. In this economy, periods with high debt levels are consistent with decreasing and increasing debt patterns depending on the aggregate growth rate. The model is calibrated to Argentinian data, and the fit is surprisingly good.Our results also allow us to rationalize the variability of the correlation between the trade balance and output growth since the global approach used in the paper allows us to unravel the underlying dynamics of the stock of private debt. |
| Keywords: | Endogenous growth, Debt Sustainability, Open Economies |
| JEL: | C62 E62 O41 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:353 |
| By: | Raouf Boucekkine (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); 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); Weihua Ruan (Purdue University [West Lafayette]) |
| Abstract: | We use Ekeland's variational principle together with Pontryagin's maximum principle to solve an optimal spatiotemporal economic growth model with a state constraint (no-negative capital stock) where capital law of motion follows a diffusion equation. We obtain the set of necessary optimal conditions for the solution to meet the state constraints for all time and locations. The maximum principle allows to reduce the infinite-horizon optimal control problem into a finite-horizon one ultimately leading to prove the uniqueness of the optimal solution with positive capital, and non-existence of the optimal solution with eventually strictly positive capital when the time discount rate is too large or too small. |
| Keywords: | Diffusion and growth, Optimal Control, State constraint, Ekeland's variational principle, Pontryagin's maximum principle |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04630098 |
| By: | Carmen Camacho (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, 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); Weihua Ruan (Purdue University [West Lafayette]); Benteng Zou (uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg) |
| Abstract: | We revisit the classical Ramsey (1928) model with time discounting and a linear production function, explicitly accounting for the inevitable limitations of tangible production factors, which must remain both finite and positive. By employing Pontryagin's (1962) maximum principle, we transform state constraints into control constraints and provide a complete solution for all impatience rates under the linear production framework. While we classify the levels of impatience as established in the existing literature, we show that the behaviors associated with this threshold fundamentally differ when input limitations are considered -a factor previously overlooked. Our analysis extends beyond the literature's traditional focus on agents with mild impatience, encompassing the entire spectrum of impatience. For highly patient agents, the policymaker prioritizes investment over consumption, ensuring the economy reaches its maximum capital level in finite time. Once this level is attained, consumption stabilizes indefinitely, achieving the golden rule trajectory -an outcome previously deemed unattainable under time discounting. Conversely, beyond the classical impatience threshold, capital and consumption decline over time. For agents with extreme impatience, we identify a second threshold where investment ceases entirely, leading to rapid depletion of capital and output. |
| Keywords: | Economic growth, Optimal Control, Dynamic Programming, Limited resources, Linear Production, Discount |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:psewpa:halshs-04879533 |
| By: | Ilzetzki, Ethan |
| Abstract: | This paper investigates how an increase in military expenditures affects an economy. It is written in the context of rising geopolitical tensions that have spurred increased military spending in the United States, Europe, and other economic areas. It draws on a large literature in macroeconomics, public finance, defense and peace studies, economic history, and the study of productivity to evaluate the short- and long-run consequences of rearmament. |
| Keywords: | Military expenditures, Fiscal multipliers, Innovation, Growth, Short- and long-run consequences of rearmament, USA, Europe |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkrp:311212 |