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on Economic Growth |
| By: | Philippe Aghion (Coll ge de France, INSEAD, LSE); Ingvild AlmŒs (University of Zurich, CEPR, IIES); Costas Meghir (Yale University, NBER, CEPR, IFS) |
| Abstract: | Human capital is central to efforts to promote growth, convergence, and the elimination of poverty. Drawing on seminal macroeconomic frameworks by Nelson-Phelps, Lucas, and subsequent developments, alongside macro and microeconomic evidence, the chapter examines the role of human capital in driving innovation and growth, emphasizing how different types of human capital matter at different stages of development, and discussing obstacles to accumulation and evidence from policy interventions. |
| Date: | 2026–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2485 |
| By: | Almaz Abebe; Shenglan Yuanb; Daniel Tesfay; James Brannan |
| Abstract: | This paper enhances the classical Solow model of economic growth by integrating L\'evy noise, a type of non-Gaussian stochastic perturbation, to capture the inherent uncertainties in economic systems. The extended model examines the impact of these random fluctuations on capital stock and output, revealing the role of jump-diffusion processes in long-term GDP fluctuations. Both continuous and discrete-time frameworks are analyzed to assess the implications for forecasting economic growth and understanding business cycles. The study compares deterministic and stochastic scenarios, providing insight into the stability of equilibrium points and the dynamics of economies subjected to random disturbances. Numerical simulations demonstrate how stochastic noise contributes to economic volatility, leading to abrupt shifts and bifurcations in growth trajectories. This research offers a comprehensive perspective on the influence of external shocks, presenting a more realistic depiction of economic development in uncertain environments. |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.00090 |
| By: | Antonin Bergeaud; Ruveyda Nur Gozen; John Van Reenen |
| Abstract: | We introduce a methodology to measure cross-country trends in innovation capability - “technological trajectories” and implement this on a new rich dataset covering patents between 1836 and 2016 across multiple countries. Intuitively, trajectories are revealed by a country’s sustained increases in patenting across multiple patent offices. We first describe the data patterns, showing the relative decline of the UK, and the rise first of the US and Germany, and then later of Japan and China. We then econometrically estimate trajectories on (i) the post-1902 period for France, Germany, Japan, the UK and US, and (ii) the post-1960 period for a wider sample of 40 countries. Our trajectories are strongly positively correlated with Total Factor Productivity growth, and also (but less strongly) associated with the growth of labour productivity and capital intensity. We show that future trajectories are predicted by a country’s initial levels of R&D, education and defence spending, classic drivers of innovation in modern growth theory. |
| JEL: | O31 O33 O34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34760 |
| By: | Sebastian Ottinger; Elizaveta Zelnitskaia |
| Abstract: | Why do cities emerge where they do? This paper exploits a rule-based transport network in Imperial Russia to study the origins of urban centers. The yams postal system, introduced by the Mongols in the thirteenth century and maintained by Muscovy, required relay stations in regular intervals to change horses, creating an infrastructure grid whose spacing reflected logistics rather than geography or pre-existing settlements. We digitize all stations listed in the 1777 Russian Road Guide along a sample of 15 major routes, and divide rays between consecutive stops into 0.5 km cells. In modern satellite data, cells located at the historical interval where horses were changed are about thirty percent brighter today than neighboring cells before or after that range. The effect is robust to first- and second-nature controls, ray fixed effects, and controlling of pre-1800 settlements, and is absent for the later Trans-Siberian Railway. Additional analyses show that subsequent city growth correlates little with geographic endowments, but was amplified by later infrastructure investments, suggesting that administrative accidents – not natural advantages – seeded some of Russia’s urban geography. The findings illustrate how spatial inequality can arise from arbitrary historical coordination points, with lasting consequences for the distribution of economic activity. |
| Keywords: | City Location, Path Dependence, Transport Infrastructure, Natural Advantage |
| JEL: | N73 O18 R11 R12 H11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp807 |
| By: | Pesaran, M. H.; Smith, R. P. |
| Abstract: | This paper provides a critical examination of the empirical basis of the output convergence debate in the light of recent developments in the analysis of dynamic heterogeneous panels with interactive effects. It shows that popular tools such as Barro’s cross-country regressions and two-way fixed effects (TWFE) estimators that assume parallel trends and homogeneous dynamics lead to substantial under-estimation of the speed of convergence and misleading inference. Instead, dynamic common correlated effects (DCCE) estimators due to Chudik and Pesaran (2015a) provide consistent estimates and valid inference that are robust to nonparallel trends and correlated heterogeneity and apply even if there are breaks, trends and/or unit roots in the latent technology factor. It also suggests a way to estimate the effect of slowly moving determinants of growth. The theoretical findings are augmented with empirical evidence using Penn World Tables data, finding little evidence of per capita output convergence across countries, very slow evidence of cross country growth convergence, and reasonably fast within country convergence. Capital accumulation is found to be the most important single determinant of cross-country differences in output while slow moving indicators such as potential for conflict and protection of property rights proved to be statistically significant determinants of the steady state levels of output per capita. We are also able to replicate a positive evidence of democratization on output, but we find that the statistical significance of this effect to fall as we allow for nonparallel trends and dynamic heterogeneity. |
| Keywords: | Output Growth, Output Convergence, Barro Regression, Panel Data Estimators, TWFE and DCCEP, Heterogeneity Bias, Nonparallel Trends |
| JEL: | C10 C33 E10 F43 O40 |
| Date: | 2026–02–03 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2607 |