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on Economic Growth |
| By: | Weifeng Larry Liu; Warwick J. McKibbin |
| Abstract: | This paper surveys long-term projections of global GDP per capita and presents our own projections through 2050 using a multi-country-multi-sector general equilibrium model (G-Cubed). Existing studies generally agree that global GDP per capita growth will continue to slow in the coming decades, driven by several global challenges such as rapid population ageing, slower technological progress, weaker capital investment, and stagnating educational attainment. Projections tend to be consistent for advanced economies, but vary considerably for developing regions, highlighting the importance of alternative methodologies and assumptions, as well as inherent long-term uncertainty. While existing studies rely on neoclassical mod-els with an aggregate production sector, the G-Cubed model takes a disaggregated approach to projecting productivity and output that accounts for dynamic inter-actions between sectors and across economies. Our projections incorporate the impacts of three fundamental factors: productivity growth, population ageing, and climate change. Productivity growth in advanced economies is expected to slow, but artificial intelligence could counteract the decline and serve as an engine for sustained growth. Population ageing in most advanced economies will continue to constrain labour supply, potentially reducing GDP per capita through changes in age structure. Climate change poses challenges to economic growth through multiple channels, with moderate quantitative impacts by mid-century. The extent to which developing regions can boost productivity, leverage demographic advantages, and navigate climate change will depend on policy choices, as well as governance and institutional improvements. Finally, the paper discusses the implications of geopolitical fragmentation, government debt, and public infrastructure on economic growth. |
| Keywords: | economic growth, long-term projections, productivity growth, population ageing, climate change, artificial intelligence, geopolitical fragmentation, government debt |
| JEL: | O40 O33 C53 C68 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2025-31 |
| By: | Sebastián Katz (Central Bank of Argentina); Eduardo Levy-Yeyati (Universidad Torcuato Di Tella) |
| Abstract: | Based on long series of per capita GDPs, we characterize the economic divergence of Argentina in the 20th century relative to a group of countries with comparable initial income per capita. We find the divergence to be considerably longer than usually conjectured, with two marked tranches in the first half of the century and in the post war period, the latter being associated with GDP underperformance despite the relative decline in population. We identify specific dates for the inflection points, discuss the context in each case, and propose a potential explanation of the divergence together with a description of the highly volatile plateau displayed since the 1990s. |
| Keywords: | divergencia económica; PIB per cápita; desempeño económico; Argentina; crecimiento económico; volatilidad económica; siglo XX |
| JEL: | N10 N16 O40 O54 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:bcr:wpaper:2024114 |
| By: | Riku Watanabe |
| Abstract: | This study introduces two heterogeneous industries into an endogenous growth model in a circular economy. In our model, there are two types of industries, brown industries using exhaustible resources for production, and green industries using recycled goods which are reproduced from the used final good by a recycling firm. Each industry switches the state as a result of R&D activities for innovation and greening. Innovation improves the level of productivity and occurs in both industries. In contrast, only firms in brown industries invest in R&D activities for greening, which transfers the brown industries toward the green industries. This paper examines the effect of recycling and the share of green industries on the growth rate. We show that an increase in the recycling rate does not have a negative effect on the economy, and improves the welfare of households. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1286 |
| By: | Blees, Philip |
| Abstract: | Scrutinizing post-Keynesian theory of endogenous technical progress and Régulation Theory, this paper examines productivity growth and its variation within capitalist economies. The aim is to identify how institutions steer productivity growth. Based on the vast literature demonstrating that institutions not only have a direct impact on the innovative environment but also affect productivity growth by changing distribution and demand, an analytical framework that distinguishes between these direct and indirect effects is derived. Applying this method to Germany and the US from 1991 to 2022, we find that Germany was characterized by a laborled productivity regime, while the US exhibited a state-led productivity regime. This finding explains the more substantial decline in productivity growth in Germany - which was due to changes in the wage-labor nexus -, as compared to the US, where public investment stabilized productivity growth. |
| Keywords: | Endogenous technical progress, growth regimes, institutions, Kaleckian models, Régulation Theory, Germany, US |
| JEL: | E11 O43 O47 P52 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ipewps:319063 |
| By: | Sébastien Fontenay; Paula Eugenia Gobbi; Marc Goñi |
| Abstract: | Fertility in sub-Saharan Africa is the highest in the world. We showcase a driver of this exceptionally high fertility which has been largely overlooked by demographers and economists: inheritance customs. We develop a theory of inheritance under subsistence agriculture, where households face economic incentives to limit fertility to avoid dividing land into inefficiently small parcels. Consequently, fertility is higher where inheritance is transmitted to a single heir (impartible) than where it is divided equally among all children (partible). We test this prediction by linking deep-rooted inheritance customs for more than 800 ethnic groups with modern demographic surveys covering 24 countries. Exploiting ancestral borders in a spatial Regression Discontinuity Design, we show that belonging to an ethnic group with impartible inheritance increases fertility by around one child per woman and that fertility differences are larger in lands subject to indivisibilities than in lands suited for cultivating labor-intensive crops. |
| Keywords: | Fertility, Inheritance, Sub-Saharan Africa |
| URL: | https://d.repec.org/n?u=RePEc:eca:wpaper:2013/390703 |
| By: | Hassan, Ramzi Abdullah Ahmed |
| Abstract: | This paper examines the impact of savings on economic growth, a critical topic in economic theory with differing views from classical and Keynesian perspectives. Classical economic theory posits that savings drive economic growth by providing funds for investment, while Keynesian theory argues that savings can reduce aggregate demand and slow growth. The study also looks at factors that influence saves behavior, such as income, interest rates, and cultural views, as well as different types of savings, such as personal, corporate, and government savings. The findings show that savings are critical to long-term economic growth because they fuel investments and stabilize economies during downturns. However, the relationship between saves and growth is complicated, as excessive savings can stifle growth if not properly channeled toward productive investment. The study suggests that savings' function in economic development significantly depends on how they are used and handled within an economy. Future research should focus on the importance of saves in various economic settings, as well as the efficacy of policies aimed at increasing the influence of savings on growth. |
| Keywords: | Savings, Economic Growth, Capital Formation, Investment, Keynesian Economics, Classical Economics. |
| JEL: | E21 E22 E62 O16 O40 |
| Date: | 2024–11–14 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124860 |
| By: | David Jacks (National University of Singapore); Kevin O’Rourke (Sciences Po); Alan Taylor (Columbia University); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | We introduce a new dataset on British exports at the bilateral, commodity-level from 1700 to 1899. We then pit two primary determinants of bilateral trade against one another: the trade-diminishing effects of distance versus the trade-enhancing effects of the British Empire. We find that the impact of gravity fell by a factor of roughly three between the 1780s and 1850s. The impact of empire on British exports was extremely large throughout, but the impact of 18th century mercantilism was much higher than that of empire in the liberal late 19th century. |
| Keywords: | Long run historical data, distance, empire, gravity, international trade |
| JEL: | F10 N70 N74 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202525 |
| By: | Minki Kim |
| Abstract: | Malaria is the primary cause of child mortality and a barrier to childhood human capital accumulation in sub-Saharan Africa. This paper quantifies the macroeconomic consequences of malaria eradication using a structural model in which individuals endogenously respond to malaria by adjusting fertility and educational investment through the quantity-quality tradeoff. The model matches the empirical estimates from an anti-malaria campaign in Tanzania. The estimated per-capita income gain from eradication is substantial—nearly three times larger than previously reported— as healthier children acquire more human capital per year of schooling, and parents also invest more per child by lowering fertility. The results support accelerating the deployment of malaria vaccines. |
| Keywords: | Malaria, fertility, childhood human capital, quantity-quality trade-off, cross-country income difference |
| JEL: | O11 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_690 |
| By: | Wei Liang; Heng-fu Zou |
| Abstract: | This paper models the cyclical rise and fall of total power - an aggregate of political, economic, military, and ideological strength-through the interplay of power accumulation, consumption, and endogenous non-linear feedback effects such as corruption and inefficiency. By framing total power as a dynamic system, we derive an optimal logistic decision rule for power accumulation from an infinite-horizon optimization problem where the state maximizes long-term utility from power and consumption. A key finding is that the state's time preference (discount factor β) intrinsically determines the logistic map's growth parameter (A). Analyzing this logistic rule using bifurcation diagrams, Lyapunov exponents, and the Feigenbaum constant, we demonstrate how decreasing patience (lower β, thus higher A) drives transitions from stable equilibria through period doubling cascades (limit cycles) into chaotic regimes, leading to collapse. Finally, we simulate historical power collapses, including those of the Roman Empire, the Soviet Union, and the Ming Dynasty, showing that all state collapses follow the same universal mathematical path - from order to chaos - driven by shifts in effective growth parameters. |
| Keywords: | Nonlinear Dynamics, Chaos Theory, Power Cycles, State Collapse, Dynamic Optimization |
| JEL: | C61 D72 D74 H11 N40 |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:763 |
| By: | Aurelien Eyquem (University of Lausanne, CH); Masashige Hamano (Waseda university, Tokyo, JP and Université du Luxembourg (Extramural Research Fellow)) |
| Abstract: | A tractable model with heterogeneous households is proposed to analyze the two-way interactions between demographic and macroeconomic variables. Total population and labor-market participation are both endogenous and affected by economic as well as demographic factors. We perform a quantitative exercise focusing on trend dynamics based on Japanese data. Our counterfactual analysis reveals the role of labor-market participation costs, sunk costs of raising newborns, and technology progress. |
| Keywords: | Heterogeneous workers, Aging, Productivity, Labor markets. |
| JEL: | E20 J11 J13 J21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:25-06 |
| By: | Diego A. Comin; Danial Lashkari; Martí Mestieri |
| Abstract: | We document the structural transformation of innovation using historical patent data since the 1850s, along with R&D expenditure and TFP growth for the post-war period. Over time, innovation has shifted from agricultural sectors to manufacturing, and, more recently, to services. We develop and quantify a multi-sector semi-endogenous growth model of structural change in innovation and production, incorporating the classical demand-pull and technology-push drivers of innovation. Sectors differ in their innovation technologies, and the extent to which they benefit from knowledge spillovers (technology-push). Nonhomothetic demand shifts the market shares toward income-elastic sectors along the growth process (demand-pull). A calibrated version of our model replicates the structural transformations of innovation and production observed in the US data. Using the model, we evaluate the future impact of Baumol’s disease on aggregate productivity and find it to be minimal. Our results suggest that aggregate productivity growth may recover in the coming decades as the service sector becomes increasingly innovation-driven. |
| JEL: | E02 O1 O4 O5 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33855 |