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on Economic Growth |
| By: | Daron Acemoglu; Ufuk Akcigit; Simon Johnson |
| Abstract: | This chapter presents a tractable framework for the study of technology adoption and diffusion in the context of economic development. Firms in countries behind the world technology frontier can rapidly adopt new techniques from the world frontier. Lower absorptive capacity (because of weak education systems, poor management practices, or barriers to technology adoption), institutional distortions, mismatch between frontier technologies and the needs of firms in the country (i.e., “inappropriate technology”), and credit market frictions slow down technology adoption and cause the economy in question to have a greater distance to the frontier and thus lower income per capita — although the long-run growth rate of the country still remains equal to that of the frontier. This framework is extended to study the choice between innovation and imitation, as well as the role of selection for higher-productivity and higher-absorptive capacity firms during the process of economic development. We illustrate the main comparative statics of our framework with a number of correlations based on cross-country and firm-level data. The tractability of the framework makes it amenable to a range of additional extensions. |
| Keywords: | technology adoption, innovation, income gap, institutions, economic growth, development, productivity |
| JEL: | O1 O3 O4 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12404 |
| By: | Erica M. Field; Madeline McKelway; Alessandra Voena |
| Abstract: | Gender norms—shared expectations about appropriate behavior by gender—shape the outcomes of men and women across societies, and are correlated with GDP per capita. This chapter surveys the literature on gender norms and economic development, focusing on the pervasive and traditional ‘male breadwinner norm’ that assigns men to market work and women to domestic responsibilities. We review empirical approaches to measuring norms, including direct survey questions on attitudes, second-order beliefs about others' views, and behavioral proxies. Establishing causal effects of norms on behavior poses significant challenges, and we review a range of approaches to identify this link. We then present the leading hypotheses about the origins of gender norms in different forms of biological comparative advantage. We discuss societal forces sustaining norms, including self-reinforcing feedback between behavior and beliefs, other institutions, and backlash against norm violations. We highlight the bidirectional relationship between norms and development: economic growth can liberalize norms through structural transformation, legal reforms, and diffusion mechanisms, whereas talent misallocation stemming from gender norms may constrain growth. We conclude by discussing gender norms beyond the breadwinner domain, including norms around kinship, property, leadership, violence, mobility, sexuality, appearance, and behavior, and identify promising directions for future research. |
| JEL: | O10 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34832 |
| By: | Benteng Zou (DEM, Université du Luxembourg); Carmen Camacho (Paris School of Economics); Weihua Ruan (Purdue University Northwest, USA) |
| Abstract: | "We develop an optimal control framework for infinite-dimensional systems with in- equality state constraints, extending the Pontryagin Maximum Principle to diffusion- driven dynamics with bounded states. The resulting conditions feature Radon-measure multipliers that characterize boundary behavior in distributed environments. As an illus- tration, we apply the framework to a model of land fertility evolving through reversible pollution and spatial diffusion. We show how discounting shapes optimal consumption, the activation of state constraints, and long-run spatial patterns. In the homogeneous case, explicit solutions identify conditions for full restoration or persistent degradation, while heterogeneous settings generate hybrid finite-horizon and long-run regimes. The framework provides general analytical tools for dynamic optimization problems with dif- fusion and bounded state variables." |
| Keywords: | "Economic growth, Diffusion, Soil Pollution, Optimal Control, Limited re- sources" |
| JEL: | C61 O44 Q15 Q56 R11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:luc:wpaper:26-01 |
| By: | Lisa Capretti; Lorenzo Tonni |
| Abstract: | The empirical literature on the relationship between income inequality and economic growth has produced highly heterogeneous and often conflicting results. This paper investigates the sources of this heterogeneity using a meta-analytic approach that systematically combines and analyzes evidence from relevant studies published between 1994 and 2025. We find an economically small but statistically significant negative average effect of income inequality on subsequent economic growth, together with strong evidence of substantial heterogeneity and selective publication based on statistical significance, but no evidence of systematic directional bias. To explain the observed heterogeneity, we estimate a meta-regression. The results indicate that both real-world characteristics and research design choices shape reported effect sizes. In particular, inequality measured net of taxes and transfers is associated with more negative growth effects, and the adverse impact of inequality is weaker - or even reversed - in high-income economies relative to developing countries. Methodological choices also matter: cross-sectional studies tend to report more negative estimates, while fixed-effects, instrumental-variable, and GMM estimators are associated with more positive estimates in panel settings. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.15690 |
| By: | Gianluigi Coppola (University of Salerno); Sergio Destefanis (University of Salerno); Giulia Nunziante (Sapienza University of Rome) |
| Abstract: | Most economists believe that cyclical factors do not impact on long-run total factor productivity. However, the Kaldorian approach maintains the existence of a significant positive relationship, while the opposite view is held by some economists, sometimes defined as Schumpeterian. In this paper we shed light on this issue disentangling the impact of the cycle on the change of technical efficiency («catch-up») from the impact on technical progress. We carry out this empirical exercise for 267 NUTS2 European regions, computing a Malmquist index of total factor productivity throughout 1995-2016. We find that the Great Recession elicits catch-up, while decisively lowering technical progress. Overall, long-run TFP growth significantly falls during the slump. We also report evidence for region groups selected across various sample cuts. In the samples dominated by regions belonging to new Member States, there is little catch-up due to the slump, and the Great Recession strongly reduces long-run TFP growth. There is also a group of low growth regions whose TFP growth is relatively insensitive to demand fluctuations. |
| Keywords: | catch-up, technical progress, Malmquist index, creative destruction |
| JEL: | O43 O47 R11 R53 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp66 |
| By: | Ping Wang; Russell Wong |
| Abstract: | How large are the effects of artificial intelligence (AI) on labor productivity and unemployment? We develop a labor-search model of technological unemployment where AI learns from workers, raises productivity, and displaces them if renegotiation fails. The model admits three steady states: no AI; some AI with limited capability, more job creation but higher unemployment; unbounded AI with endogenous growth and employment gains. Calibrated to U.S. data, the model implies a threefold productivity gain but a 23% employment loss, half within five years. Plausible parameters give rise to global and local indeterminacy with endogenous cycles in productivity and unemployment, underscoring the uncertainty of AI's impacts in line with a wide range of empirical findings. Equilibria are inefficient despite the Hosios condition; subsidizing jobs at risk of AI displacement is constrained optimal. |
| Keywords: | generative artificial intelligence; technological unemployment; search and bargaining; en dogenous growth; constrained efficiency; indeterminacy |
| JEL: | E20 J20 J64 L20 O30 O40 |
| Date: | 2026–02–23 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:102794 |
| By: | Andrea Guccione; Pau Roldan-Blanco |
| Abstract: | Firms' innovation outcomes depend on their ability to attract and retain talented inventors. What market frictions prevent the sorting between firms with high innovation potential and high-productivity inventors? How does this sorting impact aggregate innovation, growth and welfare? We address these questions both empirically and theoretically. Empirically, we show that firms facing strong competition in the product market employ more productive inventors, while less productive inventors tend to be allocated in concentrated industries. Theoretically, we embed a frictional labor market for inventors into an endogenous-growth model of strategic innovation. In line with the data, the model predicts that high-productivity inventors are disproportionately employed in firms that operate in competitive industries. We then use the model to quantify the growth and welfare implications of this inventor sorting. Our results show that matching frictions in the market for inventors impede the allocation of high- productivity inventors to firms with high implementation intensity, and are responsible for a 32% loss in economic growth. Industrial policies that subsidize R&D spending relax these frictions by boosting inventor productivity, helping high-quality inventors reallocate to firms with high implementation incentives. Under optimal subsidies, growth increases as much as 74 basis points, closing most of the gap in missing growth caused by frictions in the market for inventors. |
| Keywords: | innovation, inventors, R&D productivity, search |
| JEL: | L16 J6 O3 O4 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1562 |
| By: | Ville Korpela (Turku School of Economics, University of Turku, Finland); Eero Mäkynen (Turku School of Economics, University of Turku, Finland) |
| Abstract: | Business dynamism has been slowing globally over the last several decades. In a recent study, Akcigit and Ates (2023) examine the relative importance of different channels behind this development and highlight weakened knowledge diffusion from the technology frontier to followers as a dominant force.1 Their study also suggests that diffusion may weaken endogenously as the technology gap widens and market power accumulates, raising the question of how innovation policy can strengthen diffusion without reducing welfare. In this paper we study leader-to-follower licensing as a policy-relevant diffusion margin, and evaluate licensing subsidies relative to direct R&D subsidies. We develop an endogenous-growth general equilibrium model in which firms compete in prices and invest in R&D; the technology leader endogenously chooses whether to license to the follower, trading off higher static profits against faster follower catch-up through knowledge diffusion. We calibrate the model to Finnish data from 2014–2019. Our first exercise evaluates whether allowing licensing is desirable by shutting down the licensing channel in the calibrated economy. In the Finnish benchmark, shutting down licensing lowers growth but increases consumption-equivalent welfare, because the level effects of reduced concentration dominate the diffusion benefits of licensing. We then vary the diffusion rate through licensing and product substitutability to characterize when licensing becomes welfare-improving. In that region, solving the policymaker’s problem shows a non-trivial interaction: higher R&D subsidies can reduce equilibrium licensing by moving leaders more quickly into the monopoly-pricing states where licensing is privately unattractive, so the optimal policy mix augments R&D support with a non-negligible licensing subsidy to sustain diffusion. |
| Keywords: | Antitrust Policy, Business Dynamism, Endogenous Growth, Innovation Policy, Licensing, Technology Diffusion |
| JEL: | E22 L10 L41 O33 O34 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:tkk:dpaper:dp174 |
| By: | Gazi Salah Uddin (Linkoping University & Norwegian University of Life Sciences.); Anh H. Le (IMFS, Goethe University Frankfurt); Naoki Yago (ICMA Centre, Henley Business School, University of Reading); John Beirne (Asian Development Bank); Donghyun PARK (The South East Asian Central Banks (SEACEN) Research and Training Centre) |
| Abstract: | This paper studies the macroeconomic implications of geopolitical risks and the role of fiscal sustainability in mitigating them. Our empirical analysis exploits a comprehensive database covering 121 countries from 1985 to 2023. We find that, in countries without fiscal rules, geopolitical fragmentation leads to a persistent decline in output and a surge in the debt-to-GDP ratio. However, in countries with fiscal rules, both output and debt are stabilised in the medium- to long-run. Moreover, fiscal rules have a more pronounced effect in countries with high central bank independence, suggesting a novel monetary-fiscal complementarity. We further explore various dimensions of cross-country heterogeneity, including economic development, political institutions, and climate risks. Finally, fiscal rules promote inclusive growth by mitigating adverse distributional effects of geopolitical risks. |
| Keywords: | Fragmentation, Fiscal rule, Monetary-fiscal interaction, Economic growth |
| JEL: | E40 E52 E62 O11 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:sea:wpaper:wp62 |
| By: | Becker, Sascha O. (University of Warwick and Monash University) |
| Abstract: | This chapter explores the intersection of religion and economics on the 250th anniversary of Adam Smith’s The Wealth of Nations, first published in 1776. While Smith is often viewed as a secular figure in economics, his work was deeply influenced by the moral philosophy of his time, which was shaped by Christian thought. I discuss how economists think about the religious themes in Smith’s work in the 21st century and review what we know today about the connection between religion and economic outcomes. JEL codes: B1 ; B2 ; N3 ; N9 ; P5 ; Z12 |
| Keywords: | Adam Smith ; religion |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1598 |
| By: | Christian Catalini; Xiang Hui; Jane Wu |
| Abstract: | For millennia, human cognition was the primary engine of progress on Earth. As AI decouples cognition from biology, the marginal cost of measurable execution falls to zero, absorbing any labor capturable by metrics--including creative, analytical, and innovative work. The binding constraint on growth is no longer intelligence but human verification bandwidth: the capacity to validate, audit, and underwrite responsibility when execution is abundant. We model the AGI transition as the collision of two racing cost curves: an exponentially decaying Cost to Automate and a biologically bottlenecked Cost to Verify. This structural asymmetry widens a Measurability Gap between what agents can execute and what humans can afford to verify. It also drives a shift from skill-biased to measurability-biased technical change. Rents migrate to verification-grade ground truth, cryptographic provenance, and liability underwriting--the ability to insure outcomes rather than merely generate them. The current human-in-the-loop equilibrium is unstable: eroded from below as apprenticeship collapses (Missing Junior Loop) and from within as experts codify their obsolescence (Codifier's Curse). Unverified deployment becomes privately rational--a Trojan Horse externality. Unmanaged, these forces pull toward a Hollow Economy. Yet by scaling verification alongside agentic capabilities, the forces that threaten collapse become the catalyst for unbounded discovery and experimentation--an Augmented Economy. We derive a practical playbook for individuals, companies, investors, and policymakers. Today's defining challenge is not the race to deploy the most autonomous systems; it is the race to secure the foundations of their oversight. Only by scaling our bandwidth for verification alongside our capacity for execution can we ensure that the intelligence we have summoned preserves the humanity that initiated it. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2602.20946 |