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on Economic Growth |
| By: | Sasaki, Hiroaki; Shimizu, Kenji; Ishihara, Yousuke |
| Abstract: | This study critically reviews Afonso (2024), who proposes a model of economic growth that considers automation capital, traditional capital, skilled labor, and unskilled labor. In his definition of a balanced growth path, the progress of automation makes both the ratio of skilled labor to all labor and the skill premium asymptotically approach zero in the long run. Eventually, the economic growth rate becomes zero, which contradicts his conclusion. In contrast, if we correct the definition of the balanced growth path, the ratio of skilled labor to all labor asymptotically approaches unity in the long run, and the skill premium diverges to infinity. In this case, the long-run growth rate of per-capita output is equal to the growth rate obtained from Jones’s (1995) semi-endogenous growth model. |
| Keywords: | automation; growth, income distribution; skill premium |
| JEL: | E24 E25 J31 O31 O41 |
| Date: | 2025–04–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124420 |
| By: | Ohki, Kazuyoshi |
| Abstract: | In this paper, we construct a tractable endogenous growth model that incorporates both incremental innovation by heterogeneous incumbents and innovation by entrants. Our model features two endogenous sources of growth: quality improvement (vertical growth) and expansion in the variety of goods (horizontal growth). We then examine the policy effects of a subsidy for incremental innovation by incumbents and a subsidy for innovation by entrants on the overall economic growth rate, as well as on the relationship between the two sources of growth. Our model confirms that incumbents with higher profit flows tend to engage in incremental innovation for a longer duration and incur greater innovation costs, which is consistent with both Schumpeter's hypothesis and the findings of Christensen (1997) Additionally, the model generates counterintuitive results that are not commonly found in the conventional literature. First, a subsidy for incremental innovation by incumbents may reduce the entry of new firms. Second, a subsidy for innovation by entrants may have a negative effect on the overall economic growth rate. |
| Keywords: | Economic Growth, \&D, In-house model, Firm-Heterogeneity, Innovation by Incumbents, IPR policy, Incremental Innovation, Sustaining Innovation |
| JEL: | O31 O32 O33 O34 O41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124304 |
| By: | Leonid V. Azarnert |
| Abstract: | I study the effect of educational policy in the host economy on human capital accumulation and growth. The analysis is performed in a two-country growth model with endogenous fertility. I show that providing additional free educational services for immigrant children can increase the attractiveness of migration for less skilled individuals, which can outweigh the positive effect of this policy on the acquisition of human capital. In contrast, imposing taxes on immigrants in the host country reduces low-skilled immigration flows and has the potential to promote human capital accumulation if the resulting revenues are channeled into educational subsidies. |
| Keywords: | migration, child education, fertility, human capital, growth, brain drain, brain dilution tax |
| JEL: | D30 F22 J10 J13 J24 O15 O40 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11727 |
| By: | Tomohiro Hirano; Joseph E. Stiglitz |
| Abstract: | This paper analyses the impact of credit expansions arising from increases in collateral values or lower interest rate policies on long-run productivity and economic growth in a two-sector endogenous growth economy with credit frictions, with the driver of growth lying in one sector (manufacturing) but not in the other (real estate). We show that it is not so much aggregate credit expansion that matters for long-run productivity and economic growth but sectoral credit expansions. Credit expansions associated mainly with relaxation of real estate financing (capital investment financing) will be productivity-and growth-retarding (enhancing). Without financial regulations, low interest rates and more expansionary monetary policy may so encourage land speculation using leverage that productive capital investment and economic growth are decreased. Unlike in standard macroeconomic models, in ours, the equilibrium price of land will be finite even if the safe rate of interest is less than the rate of output growth. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.23552 |
| By: | Giacomo Corneo |
| Abstract: | History shows militarily dominant states that pursue imperialism, relying on their might to extort resources from weaker states. Occasionally, the latter revolt and the dominant state suffers some casualties. This paper explores imperialism along steady-growth paths. If the dominant state maximizes domestic welfare, it should eventually give up imperialism because its safety costs asymptotically overrun its material benefits. To shed light on diametrically opposed historical records, I propose a model of endogenous ideology and war bias in which the political elite cares about self-image. If that concern is strong enough, the political elite gradually identifies with its country's mission of hegemony and imperialism persists. It is first driven by material concerns and later by ideal ones. Despite its divergent preferences, the population of a dominant state generally has little interest to oppose imperialism. |
| Keywords: | imperialism, long-run growth, value of life, self-image. |
| JEL: | H80 N40 O00 Z10 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11797 |
| By: | Sascha O. Becker; Amma Panin; Steven Pfaff; Jared Rubin |
| Abstract: | This chapter examines the role of religion in economic development, both historically and today. Religion’s influence varies globally, with high religiosity in countries like Pakistan and low rates in China. Despite declines in some Western countries, religion remains influential worldwide, with projected growth in Muslim populations due to higher fertility rates. Religion continues to shape societal norms and institutions, such as education and politics, even after its direct influence fades. The chapter explores how religious institutions and norms have impacted economic outcomes, focusing on both persistence and decline. It also examines cultural transmission, institutional entrenchment, networks, and religious competition as mechanisms sustaining religion’s influence. We explore the relationship between religion and secularization, showing that economic development does not always reduce religiosity. Lastly, the chapter highlights gaps in the literature and suggests future research areas on the evolving role of religion in economic development. |
| Keywords: | religion, economic development, religiosity, cultural transmission, secularization, historical persistence, religious competition, networks, social norms |
| JEL: | D85 I25 J10 N30 O33 O43 P48 Z10 Z12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11724 |
| By: | Matteo Straccamore; Matteo Bruno; Andrea Tacchella |
| Abstract: | Debates over the trade-offs between specialization and diversification have long intrigued scholars and policymakers. Specialization can amplify an economy by concentrating on core strengths, while diversification reduces vulnerability by distributing investments across multiple sectors. In this paper, we use patent data and the framework of Economic Complexity to investigate how the degree of technological specialization and diversification affects economic development at different scales: metropolitan areas, regions and countries. We examine two Economic Complexity indicators. Technological Fitness assesses an economic player's ability to diversify and generate sophisticated technologies, while Technological Coherence quantifies the degree of specialization by measuring the similarity among technologies within an economic player's portfolio. Our results indicate that a high degree of Technological Coherence is associated with increased economic growth only at the metropolitan area level, while its impact turns negative at larger scales. In contrast, Technological Fitness shows a U-shaped relationship with a positive effect in metropolitan areas, a negative influence at the regional level, and again a positive effect at the national level. These findings underscore the complex interplay between technological specialization and diversification across geographical scales. Understanding these distinctions can inform policymakers and stakeholders in developing tailored strategies for technological advancement and economic growth. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.22666 |
| By: | Farmer, J. Doyne; Barbrook-Johnson, Peter; Tankwa, Brendon; Vazquez Bassat, Lucas (University of Oxford Department of Economics) |
| Abstract: | Understanding national-level technology adoption is critical for addressing economic, societal, and environmental challenges. This study analyzes 27 technology datasets with good temporal and regional coverage to understand national-level technology diffusion, and identifies the logistic S-curve as a robust, parsimonious model for capturing adoption patterns. We show that technology adoption speeds have increased over time, especially in Information and Communication Technologies (ICT). While early-adopting countries (leaders) often have slower diffusion, later adopters (followers) benefit from imitation and de-risking, supporting a national-level "fast-follower" hypothesis. Structural factors also shape these outcomes: adoption speed grows with GDP growth but falls with population size; technology leadership is influenced by GDP per capita, government effectiveness, distance to a technology's inventor, and population size. Our findings reinforce established theories while providing new insights into cross-country variation, shifting adoption sequences, and increasingly rigid country rankings, particularly in ICT. This evidence helps policymakers and researchers better understand technology diffusion and can inform strategies that guide technological progress. |
| Keywords: | S-curves, National-level data, Technological progress, Technology leadership, Drivers of technology |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:amz:wpaper:2025-01 |
| By: | Ohyun Kwon (School of Economics, Drexel University); Constantinos Syropoulos (School of Economics, Drexel University; CESifo); Yoto V. Yotov (School of Economics, Drexel University) |
| Abstract: | Direct measures of the economic impact of sanctions are contaminated by the endogeneity that arises when other events in target countries (e.g., civil or interstate conflicts, political independence, etc.) instigate the imposition of sanctions. To address this issue, we propose a novel instrument, sender’s aggressiveness, captured by the number of sanctions imposed in a given year. After establishing the validity of this instrument, we quantify the impact of sanctions on growth in sanctioned states and show that, on average, an additional sanction decreases contemporaneous real GDP per capita in target states by 0.39 percent. We also substantiate the presence of a significant (in magnitude) downward bias in the corresponding OLS estimates and demonstrate that the effects of sanctions on growth vary widely depending on the types of sanctions considered, their purported objectives, measures of their success, and the duration of their effects. |
| Keywords: | Real GDP per capita growth, trade sanctions, smart sanctions, long-run effects |
| JEL: | F43 F51 F63 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202516 |
| By: | Maximilien Bernard; Jean-Philippe Bouchaud; Pierre Le Doussal |
| Abstract: | We study the competition between random multiplicative growth and redistribution/migration in the mean-field limit, when the number of sites is very large but finite. We find that for static random growth rates, migration should be strong enough to prevent localisation, i.e. extreme concentration on the fastest growing site. In the presence of an additional temporal noise in the growth rates, a third partially localised phase is predicted theoretically, using results from Derrida's Random Energy Model. Such temporal fluctuations mitigate concentration effects, but do not make them disappear. We discuss our results in the context of population growth and wealth inequalities. |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2503.23189 |