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on Economic Growth |
| By: | Oded Galor; Daniel C. Wainstock |
| Abstract: | Is income inequality in the United States primarily driven by disparities between ethnic groups or within them? Contrary to conventional wisdom, this study uncovers a striking and transformative empirical regularity: an overwhelming 96% of contemporary inequality arises from disparities within groups sharing a common ancestral origin, dwarfing the comparatively minor contribution of inequality between groups. This extraordinary pattern persists across time, educational attainment, demographic characteristics, and geographic regions. The findings represent a shift in the empirical understanding of inequality in the United States, revealing that the deepest and most persistent economic divides run within, rather than between, ethnic communities. |
| Keywords: | inequality, ethnicity, within group inequality, between group inequality |
| JEL: | O15 Z13 D63 J15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12245 |
| By: | Sarah Quincy; Chenzi Xu |
| Abstract: | We study the long-run effects of the first wave of U.S. banking market integration on capital mobility and manufacturing productivity. Using newly digitized bank and branch balance sheet data matched to state and county panels, we provide direct evidence that branching produced lasting productivity gains without aggregate capital deepening by leveraging internal capital markets to improve the geographic allocation of capital. Our novel ``deposit market access'' measure shows that bank funding grew most in capital-constrained counties within branching states. Both market access and border discontinuity designs indicate that branching’s organizational structure reduced capital allocation frictions to generate persistent growth. |
| JEL: | G21 G28 N12 N22 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34457 |
| By: | Colin Davis (The Institute for the Liberal Arts, Doshisha University, JAPAN); Laixun Zhao (Research Institute for Economics and Business Administration, Kobe University, JAPAN) |
| Abstract: | We study how tax and transfer policies affect economic growth and income inequality in a framework in which growth, market structure and time preferences are all endogenously determined. Firm-level investment in product quality drives economic growth, creating a demand for household savings to finance both market entry and in-house R&D. By distinguishing between affluent households that invest in financial assets and poor households that live hand-to-mouth, and linking the former's savings to an endogenously determined discount rate, we derive the conditions for a stable balanced growth path. We then explore the effects of taxing the wage income and asset income of affluent households, while redistributing the proceeds to poor households, and find that diminishing marginal impatience introduces a new channel where both higher growth and lower inequality can be achieved, through tax policies that influence market concentration. |
| Keywords: | Endogenous time preferences; Diminishing marginal impatience; Endogenous quality growth; Wage income taxes; Interest income taxes |
| JEL: | E00 O31 O41 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:kob:dpaper:dp2025-27 |
| By: | Heng-fu Zou (Institute for Advanced Study, Wuhan University; World Bank) |
| Abstract: | This paper advances the idea of a republic of entrepreneurs - a spontaneous, rule-governed order in which many people repeatedly propose, test, and diffuse improvements-and argues that it is the main engine of modern prosperity. We braid this republic with the republic of letters and the republic of science, contending that open discourse, self-governed inquiry, and contestable enterprise reinforce one another to convert useful knowledge into useful industry. The analytical backbone in- tegrates Cantillon's functional entrepreneur, Mises's economic calculation and residual claimancy, Hayek's discovery procedure and dispersed knowl edge, Kirzner's alertness and equilibration, Mokyr's Industrial Enlightenment and "market for ideas, " McCloskey's rhetoric of bourgeois dignity, and Phelps's grassroots dynamism. Historical cases-Britain, the United States, France, Germany, and biomedicine show that breakthrough eras depended less on elite R&D and more on dense portfolios of small, decentralized experiments under general rules that kept feedback honest and im itation lawful. We contrast this republican view with outcome-targeting elite-centric growth models, derive testable implications (proposal den- sity, feedback speed, diffusion breadth), and sketch a policy stance that privileges general over discretionary rules, interoperability and open stan dards, reputation systems that make quality legible, and intellectual property that teaches while remaining finite. Reframing innovation as a civic practice explains both the magnitude and inclusiveness of the Great Enrichment and recommends "republic of entrepreneurs" as a term of art for growth and development economics. |
| Date: | 2025–11–01 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:798 |
| By: | Mr. Rabah Arezki; Youssouf Camara; Patrick A. Imam; Mr. Kangni R Kpodar |
| Abstract: | This paper uses two different historical accounts of the occurrence of earthquakes to identify the effects of these shocks on aggregate economic outcomes. We find that the use of a widely popular dataset Emergency Events Database (EM-DAT) that records natural disasters restricted to occurrence with high level of damage points to statistical negative consequences of earthquakes on economic growth. Yet, these results do not hold when using a more comprehensive dataset from the United States Geological Survey (USGS) systematically recording earthquakes irrespective of the associated damage. The two results can be reconciled when isolating case of high-damage earthquakes in the context of poor countries often associated with weaker state capacity. These findings confirm the negative consequences of natural disasters' role on economic development in poor countries and highlight the importance of systematic data collection of natural disasters. |
| Keywords: | Earthquakes; Economic Growth; Poor Countries |
| Date: | 2025–11–07 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/232 |
| By: | Bekkers, Eddy; Humphreys, Lee; Kalachyhin, Hryhorii; Wilczynska, Karolina; Zhao, Danchen |
| Abstract: | This paper studies the macroeconomic impacts of artificial intelligence (AI) using a quantitative trade model with multiple sectors, multiple factors of production, and intermediate linkages. The reallocation of tasks from labour to AI services will generate productivity gains in the model, and AI will reduce operational trade costs. We build four scenarios that differ in how far less-prepared economies catch up. The simulations yield three main findings. First, AI adoption is projected to substantially boost global trade flows and eco-nomic growth: in the most favourable scenario, the diffusion of AI raises global GDP by an additional 13.2% over the next 15 years compared to the baseline. Global trade volumes are projected to be 35% larger than without AI. Second, low- and middle-income economies can capture more of these gains if they improve their digital infrastructure and ensure adequate AI deployment across the economy. Third, AI is projected to change the withincountry income distribution. While all factors gain in real terms, returns shift toward capital and the skill premium declines. The magnitude of these distributional effects depends on the long-run growth rate of AI and the degree of complementarity between production factors. |
| Keywords: | Artificial Intelligence, Computational general equilibrium, Productivity, Technology adoption, Trade Cost |
| JEL: | C68 E13 O33 O41 F17 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wtowps:330670 |