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on Economic Growth |
| By: | Basihos, S. |
| Abstract: | Since the mid-1990s computing revolution, advanced economies have shown several striking regularities. After a decade-long boom, labor productivity growth has slowed, falling below its historical trend. Meanwhile, the labor share has declined sharply, and capital efficiency has decreased. This paper argues that these developments are not isolated but reflect a common structural change, with one possible driver being the faster obsolescence of capital in use due to the rapid advances of the computing revolution. Evidence from U.S. data suggests a significant rise in the capital obsolescence rate. To interpret these dynamics, I draw on an endogenous growth model of the U.S. economy. The model shows that while accelerated capital replacement initially boosts productivity, it ultimately leads to less effective use of resources under labor–capital complementarity, because labor skill creation lags behind the rapid introduction of new capital. As a result, the long-run outcomes under this regime are slower productivity growth, a lower labor share, and reduced capital efficiency. The quantitative model outputs are largely consistent with recent trends observed in advanced economies. |
| Keywords: | Obsolescence, Productivity Growth, Labor Share |
| JEL: | E20 O40 |
| Date: | 2025–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2559 |
| By: | Eduardo Koffmann Jopia; Patricia Galilea Aranda |
| Abstract: | Does it matter whether a government is "left wing" or "right wing" for economic growth? Using a panel of 113 countries (1995 2022), we combine: (i) the economic ideology of the executive branch (V Dem), (ii) the disaggregated institutional quality of the economic freedom index (Heritage), separating a core institutional block (HN: property rights, government integrity, judicial effectiveness) from a block of liberalization policies (HL: trade/financial openness, regulatory efficiency, size of government), and (iii) economic performance (GDP per capita PPP and its growth, World Bank). We estimate panel models with fixed effects by country and year, and standard errors grouped by country. We find that HN is strongly associated with higher income levels, while HL, on average globally, is not significant for income level once HN is controlled for, nor does it consistently predict short term growth. Government ideology exhibits weak direct effects on growth, although it operates indirectly via HL (right wing governments tend to have higher HL scores). Robustness tests with long five-year differences and country specific trends reinforce that, in the long run, "institutions prevail over politics." We conclude with recommendations for developing countries: prioritize the institutional core (rule of law, anti-corruption, effective justice) as a basis for policies whether left-wing or right wing to bear fruit in terms of growth |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04532 |
| By: | Joshua L. Rosenbloom |
| Abstract: | This chapter explores the distinctive trajectory of American industrialization up to 1870, emphasizing how the United States adapted and transformed British technologies to suit its unique economic and resource conditions. Rather than a straightforward transfer of innovations, the chapter argues that American industrial development was shaped by path-dependent processes and historical contingencies—such as the Embargo Act of 1807 and government sponsorship of firearms production—that enabled the emergence of a domestic innovation ecosystem. The chapter offers fresh insights into how high-pressure steam engines, vertically integrated textile mills, and precision manufacturing techniques evolved in response to labor scarcity, capital constraints, and abundant natural resources. A particularly novel contribution is the detailed analysis of how American manufacturers substituted mechanization and organizational innovation for skilled labor, leading to the development of technologies that were not only distinct from their British counterparts but also foundational for the Second Industrial Revolution. The chapter also highlights the democratization of invention, showing how economic incentives and institutional support fostered widespread innovation among ordinary citizens. By integrating technological, economic, and institutional perspectives, this chapter provides a compelling explanation for why the United States developed a robust manufacturing sector despite seemingly unfavorable initial conditions. |
| JEL: | N61 N71 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34225 |
| By: | Nils H. Lehr |
| Abstract: | This paper provides evidence that rising misallocation in the R&D sector contributed to the recent slowdown in U.S. productivity growth. I develop a growth accounting framework allowing for misallocation of R&D resources across firms captured by wedges between their marginal cost and benefits of R&D. I show that R&D wedges can be measured from R&D returns and document large and persistent differences in R&D returns across US-listed firms. Combining data and model, I estimate that frictions reduced productivity growth by 18% over 1975–2014 and that rising misallocation in the R&D sector accounts for 25% of the growth slowdown. |
| Keywords: | R&D; productivity growth; growth slowdown |
| Date: | 2025–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/183 |
| By: | Rongyan Chen; Ci Chen; Ziyang Yan |
| Abstract: | In the mid-1990s, the concept of smart growth emerged in the United States as a critical response to the phenomenon of suburban sprawl. To promote sustainable urban development, it is necessary to further investigate the principles and applications of smart growth. In this paper, we propose a Smart Growth Index (SGI) as a standard for measuring the degree of responsible urban development. Based on this index, we construct a comprehensive 3E evaluation model (covering economic prosperity, social equity, and environmental sustainability) to systematically assess the level of smart growth. For empirical analysis, we selected two medium-sized cities from different continents: Wuhu County, China, and Colima, Mexico. Using an improved entropy method, we evaluated the degree of smart growth in recent years and analyzed the contributions of various policies to sustainable urban development. Guided by the ten principles of smart growth, we further linked theoretical insights to practical challenges and formulated a development plan for both cities. To forecast long-term trends, we employed trend extrapolation based on historical data, enabling the prediction of SGI values for 2020, 2030, and 2050. The results indicate that Wuhu demonstrates greater potential for smart growth compared with Colima. We also simulated a scenario in which the population of both cities increased by 50 percent and re-evaluated the SGI. The analysis suggests that while rapid population growth tends to slow the pace of smart growth, it does not necessarily exert a negative impact on the overall trajectory of sustainable development. Finally, we conducted a study on the application of Transit-Oriented Development (TOD) theory in Wuhu County and proposed several policy recommendations aimed at enhancing the city's sustainable urban development. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.04529 |
| By: | Zhuokai Huang; Demian Pouzo; Andr\'es Rodr\'iguez-Clare |
| Abstract: | We develop a novel analytical method for studying optimal paths in dynamic optimization problems under general monotonicity conditions. The method centers on a locator function -- a simple object constructed directly from the model's primitives -- whose roots identify interior steady states and whose slope determines their local stability. Under strict concavity of the payoff function, the locator function also characterizes basins of attraction, yielding a complete description of qualitative dynamics. Without concavity, it can still deliver sharp results: if the function is single crossing from above, its root identifies a globally stable steady state; if the locator function is inverted-U-shaped with two interior roots (a typical case), only the higher root can be a locally stable interior steady state. The locator function further enables comparative statics of steady states with respect to parameters through direct analysis of its derivatives. These results are obtained without solving the full dynamic program. We illustrate the approach using a generalized neoclassical growth model, a rational (un)fitness model, and a learning-by-doing economy. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2509.05354 |
| By: | Paolo Giovanni Piacquadio |
| Abstract: | This paper characterizes a novel class of welfare criteria for settings with endogenous population. The core innovation is to treat parents’ fertility preferences as ethically relevant, deferring to them on the quality--quantity trade-off under conditions of equality. The resulting family of criteria generalizes discounted utilitarianism by reconciling respect for parents' fertility preferences with equity across generations. These criteria resolve long-standing normative dilemmas that afflict existing approaches to population ethics, such as total and average utilitarianism. After formal characterization, I illustrate the criterion in stylized examples and a Barro–Becker environment. |
| Keywords: | intergenerational justice, fertility preferences, exponentially-discounted utilitarianism, social welfare |
| JEL: | D60 D70 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12106 |