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on Economic Growth |
| By: | Francesco Agostinelli; Matthias Doepke; Giuseppe Sorrenti; Fabrizio Zilibotti |
| Abstract: | This chapter argues that parenting choices are a central force in the joint evolution of culture and economic outcomes. We present a framework in which parents - motivated by both their children’s future success and their own normative beliefs - choose parenting styles and transmit cultural traits responding to economic incentives. Values such as work ethic, patience, and religiosity are more likely to be instilled when their anticipated returns, economic or otherwise, are high. The interaction between parenting and economic conditions gives rise to endogenous cultural and economic stratification. We extend the model to include residential sorting and social interactions, showing how neighborhood choice reinforces disparities in trust and human capital. Empirical evidence from the World Values Survey supports the model’s key predictions. We conclude by highlighting open questions at the intersection of parenting, culture, and inequality. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11936 |
| By: | Thomas Fent; Stefan Wrzaczek; Gustav Feichtinger; Andreas Novak |
| Abstract: | China and India, two Asian countries that experienced a rapid decline in fertility since the middle of the twentieth century, are the focus of this paper. Although there is no doubt that lower fertility levels have many positive effects on the economy, development and sustainability, little is known about the optimal transition from high to medium or even low levels of fertility. Firstly, implementing policies that have the potential to reduce fertility is costly. Secondly, additional costs arise from adapting the infrastructure to a population that fluctuates quickly not only in terms of size but also with respect to the age structure. We apply an intertemporal optimisation model that takes the costs and benefits of fertility decline into account. The optimal time path depends on the cost structure, the planning horizon and the initial conditions. In the case of a long planning horizon and high initial fertility, it may even be optimal to reduce fertility temporarily below replacement level in order to slow down population growth at an early stage. A key finding of our formal investigation is that, under the same plausible parameter settings, the optimal paths for China and India differ substantially. Moreover, our analysis shows that India, where the fertility decline emerged as a consequence of societal and economic developments, followed a path closer to the optimal fertility transition than China, where the fertility decline was state-imposed. The mathematical approach deployed for this analysis provides insights into the optimal long-term development of fertility and allows for policy conclusions to be drawn for other countries that are still in the fertility transition process. |
| Keywords: | Fertility decline, age structure, China, India |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:vid:wpaper:2401 |
| By: | Davide M. Coluccia; Gaia Dossi |
| Abstract: | Novel products, processes and technologies are important drivers of economic growth. Davide Coluccia and Gaia Dossi show how migrants from Britain to the United States in the late 19th and early 20th century not only took new ideas with them, but also helped to bring American innovations back to the old country. |
| Keywords: | age of mass migration, innovation, networks, out-migration |
| Date: | 2025–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:708 |
| By: | Engelbert Stockhammer |
| Abstract: | Comparative Political Economy (CPE) is a field in the social sciences that explores the interaction of economic dynamics and political institutions in a comparative cross-country fashion. Recently, the growth models approach (GMA), which builds on post-Keynesian economics (PKE), has challenged the more supply-side oriented varieties of capitalism approach. This paper gives an overview of the debate around GMA, with a focus on macroeconomic issues. It first, discusses the fragmentation of the 19th century political economy approach into heterodox economics and the subsequent formation of CPE and International Political Economy in the social sciences. Second, it clarifies the relations between VoC, GMA and PKE. Third, it reviews debates on identifying growth models empirically; the interpretations of finance-led growth; and the application of GMA to emerging economies, which requires extending and possible reconsidering the analytical framework of GMA. It concludes by discussing similarities and differences between the growth models approach and the French Regulation Theory and Social Structures of Accumulation. It argues that GMA’s analytical framework has been shaped by the experience of the pre-GFC boom and current debates are about building a more general analytical framework. |
| Keywords: | Post-Keynesian Economics, Comparative Political Economy, growth models, economic growth |
| JEL: | B20 B50 E12 O43 P51 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2515 |
| By: | Batabyal, Amitrajeet; Beladi, Hamid |
| Abstract: | In this paper, we analyze a dynamic model in which two stylized regions A and B use an artificial intelligence (AI)-based technology α(t) to produce a knowledge good Q(t). Even though the initial value of the AI-based technology α(0) is identical in both regions, region A saves and hence invests more than region B to make the existing AI-based technology more powerful. We show that this differential investment means that the ratio of the output of the knowledge good in region A to region B or Q_A⁄Q_B is continually rising. In other words, without targeted policy, region A will become a “leading region” that experiences economic growth and innovation ahead of region B which will become a “lagging region” that innovates less and hence tends to grow more slowly. |
| Keywords: | Artificial Intelligence, Dynamics, Economic Growth, Region, Technology |
| JEL: | O33 R11 |
| Date: | 2025–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124730 |
| By: | Yu Sasaki (Faculty of Economics, The University of Tokyo) |
| Abstract: | This article explores the diffusion of illegal literature and its impact on the French Revolution. Extant literature focuses on the role of modern communications technologies in understanding authoritarian longevity. I argue that pre-modern print media can be a powerful tool to generate support for political change. I construct a new data set by drawing on a corpus of more than 600 illegal books circulated in the eighteenth century. Using the number of émigrés and death sentences as my proxies for the revolution, I show that the diffusion of illicit literature has a positive and significant impact on nobles and clergymen who fled from France but not those who received death sentences. My analysis provides evidence that foreign publishers play a crucial role in the growth of the clandestine market and suggests that technological progress strengthens contemporary authoritarian survival by controlling the flow of information in society. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:tky:fseres:2025cf1252 |
| By: | Yann Bramoull´e; Sanjeev Goyal; Massimo Morelli |
| Abstract: | Most societies in the world contain strong group identities and the culture supporting these groups is highly persistent. This persistence in turn gives rise to a practical problem: how do and should societies with strong group identities organize themselves for exchange and public good provision? In this paper, we develop a theoretical framework that allows us to study, normatively and positively, the relationship between social structure, state capacity, and economic activity. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:baf:cbafwp:cbafwp25242 |
| By: | Grégory Donnat (Université Côte d'Azur, CNRS, GREDEG, France); Maxime Menuet (Université Côte d'Azur, CNRS, GREDEG, France); Alexandru Minea (LEO, University of Orleans, France; Carleton University, Canada); Patrick Villieu (LEO, University of Orleans, France) |
| Abstract: | What explains the persistent slowdown in total factor productivity (TFP) growth across advanced economies? This paper identifies rising public debt as a key structural driver. Using a panel of 25 OECD countries from 1980 to 2019, we provide robust empirical evidence that sustained debt accumulation has significantly contributed to the TFP deceleration, consistent with a hysteresis mechanism whereby temporary fiscal shocks leave long-lasting scars on productivity levels. To account for this evidence, we develop a theoretical model grounded in a stochastic endogenous growth setup. In the deterministic equilibrium, higher public debt ratios reduce TFP growth via a long-run crowding-out effect. In the stochastic setting, we uncover a new procyclical amplification mechanism, whereby debt adjustments amplify fluctuations in TFP. Our model reproduces the observed negative correlation between cyclical components of public debt and TFP without relying on persistent exogenous shocks, offering a novel perspective on the drivers of the productivity slowdown. |
| Keywords: | Total factor productivity, Endogenous growth, Public debt |
| JEL: | E62 H62 O41 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2025-26 |
| By: | de la Fonteijne, Marcel R. |
| Abstract: | For several decades, it has been recognized that the implementation of capital and labor augmented technical progress, as is done to date, leads to a theoretical paradox: either the CES production function has to be Cobb-Douglas or there exists labor augmented technical progress only. This so-called “Cobb-Douglas or labor augmented technical progress only paradox” continues to appear in economic models despite its inconsistency. In this paper, we reject the conventional approach, i.e., all kind of neutral and non-neutral capital and labor augmented technical progress and propose a revised implementation of technical progress that resolves the paradox. Economic growth is modeled as partly exogenous, driven by technical change, and partly endogenous, driven by capital accumulation. We provide formulas to translate total factor productivity (TFP) into economic growth to show the connection, thereby clarifying the link between TFP and output dynamics. This approach offers a new perspective on the Solow model and opens alternative paths for investigating endogenous growth mechanisms. |
| Keywords: | Capital and Labor Augmented Technical Progress; Growth Model; Maximum Profit Condition; Production Function; General Technological Progress; Capital-Labor-mix; Elasticity of Substitution; DSGE; Total Factor Productivity; Solow model; Hicks; Harrod |
| JEL: | E00 E20 E23 E24 |
| Date: | 2025–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125134 |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family's entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicate the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| Keywords: | Entrepreneurship; R&D Policy; Innovation; IQ; Endogenous Growth |
| JEL: | O31 O38 O47 J24 |
| Date: | 2025–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgif:1410 |
| By: | Tao, Miaomiao; Saadaoui, Jamel |
| Abstract: | We identify the negative influence of nationalist sentiment on economic growth. Our cross-country evidence confirms the growth-depressing effect of nationalism, projecting that economic growth has been constrained by roughly 12 percent over thirty years. This conclusion is robust across various tests. Paradoxically, nationalism helps reduce environmental damage, lowering overall emissions and intensity, especially in the building, industry, and transportation sectors. We observe that the effect of nationalism in cutting carbon emissions weakens slightly as GDP per capita rises. However, in poorer countries, this environmental impact remains steady regardless of changes in income, suggesting nationalism’s role in reducing emissions stays stable despite economic growth. |
| Keywords: | Nationalism; Economic Growth; Political Economy; Environmental Impact |
| JEL: | F5 F52 O40 O47 |
| Date: | 2025–06–22 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125113 |