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on Economic Growth |
| By: | Balazs Egert |
| Abstract: | This paper reviews the contributions of the 2025 Nobel Prize in Economics laureates, Joel Mokyr, Philippe Aghion and Peter Howitt, to our understanding of innovation-driven economic growth, situating their work within the broader evolution of modern growth theory and empirical evidence. It highlights why the Industrial Revolution marked a transition to sustained, self-reinforcing technological progress and shows how Mokyr's emphasis on knowledge, culture and institutions complements Aghion and Howitt's Schumpeterian framework, which formalises innovation as a competitive process of firm entry, exit and technological replacement. The paper then uses these frameworks to interpret the widespread productivity slowdown observed in advanced OECD economies since the mid-2000s, arguing that weakened creative destruction, slower diffusion of frontier technologies, declining business dynamism and policy headwinds are key explanatory factors. |
| Keywords: | innovation, productivity, economic growth, creative destruction, institutions |
| JEL: | O30 O40 O43 L16 N10 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12572 |
| By: | Sriket, Hongsilp |
| Abstract: | This paper introduces automation into an otherwise standard Solow growth model and shows that doing so can generate qualitatively different global dynamics. By modeling automation as a distinct form of capital and defining aggregate assets as the sum of physical and automation capital, the law of motion for aggregate assets per capita becomes piecewise defined, with a threshold separating a regime without automation from one in which physical and automation capital are jointly accumulated. Depending on the saving rate and structural parameters, the economy may converge to a Solow-type steady state without automation, a mixed-capital steady state with automation, or exhibit unbounded AK-type growth. We identify simple parameter restrictions that govern the feasibility of sustained growth and the long-run adoption of automation. Furthermore, we complement the qualitative analysis with closed-form solutions that provide a tractable and transparent characterization of the model’s full dynamic path. |
| Keywords: | Solow growth model; automation; saving rate; transitional dynamics; threshold dynamics; closed-form solutions |
| JEL: | E22 O33 O41 |
| Date: | 2026–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127795 |
| By: | Arpan Chakraborty |
| Abstract: | This paper analyzes the macroeconomic consequences of military spending and militarization within a dynamic growth framework. Building on a Keynesian goods-market model, we examine how the allocation of government expenditure between civilian and military sectors affects capital accumulation and technological progress. Military spending generates opposing effects: it stimulates aggregate demand and may support innovation through defense-related research, but it also crowds out civilian investment and creates structural rigidities. We formalize these mechanisms in a stylized endogenous-growth model in which productivity depends on the degree of militarization, producing a non-linear relationship between the military burden and long-run growth. Calibrated simulations show that moderate levels of military spending can temporarily support growth, whereas excessive militarization reduces long-run development. We further illustrate the asymmetric growth costs of conflict using a simple two-country war simulation between an advanced economy and a sanctioned middle-income economy. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2603.23980 |
| By: | Antonio Paradiso (Ca’ Foscari University of Venice); Claudio Sardoni (Sapienza University of Rome); Andrea Teglio (Ca’ Foscari University of Venice) |
| Abstract: | This article develops a discrete-time model of economic growth inspired by classical thought, which unifies within a single formal framework the fundamental insights of Adam Smith, David Ricardo, and Thomas Robert Malthus. On the analytical level, the model allows for: (i) deriving a compact relationship between the output growth rate and the effective net profit rate, as well as an economic relevance condition that precludes degenerate trajectories; (ii) characterizing the distribution of income between profits and rents as a function of technological parameters (labor productivity, land–labor ratio, unit rent), highlighting the role of the reinvested profit share; (iii) specifying three variants—Smithian, Ricardian, and Malthusian— obtained solely by modifying the rule governing labor productivity formation and/or population dynamics. The model provides a unified formal framework to represent and compare the three main classical perspectives on growth, elucidating the connection between intertemporal dynamics and income distribution through a tool suitable for both theoretical analysis and numerical simulation. |
| Keywords: | Classical economic growth; Growth regimes; Structural change; Nonlinear dynamics; Malthusian trap |
| JEL: | B12 N13 O11 O41 C62 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2026:12 |
| By: | Dimitar Sabev (Bulgarian Academy of Sciences, Economic Research Institute) |
| Abstract: | This article argues that growth is not always a path to greater happiness - based on data from 134 countries grouped into 6 regions, the analysis identified three major patterns in the relationship between economic growth and subjective wellbeing. In the Global North, there is a significant negative association – that is, higher growth impedes the population’s wellbeing. For the emerging economies in Asia and Latin America, the link is positive: higher economic growth promotes happiness. Finally, for a broad group of countries in Africa and the Middle East, as well as in the Eurasia region, there is no clear statistical association between growth and happiness, assumedly because of their statist and resource-based economic structure. The general conclusion confirms the existence of the Easterlin Paradox on an international level, which might be explained by two main factors: the higher marginal social and environmental costs of growth beyond a certain threshold, and the need for institutions to provide equitable distribution of the surplus output. The main policy implication of this finding is that “more growth†is an improper development prescription for both the richest and the poorest nations. |
| Keywords: | economic growth; subjective wellbeing; post-growth; Easterlin Paradox; institutions |
| JEL: | O43 O47 I31 R11 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:sko:wpaper:bep-2026-02 |
| By: | Anton Korinek; Joseph E. Stiglitz |
| Abstract: | Rapid progress in new technologies such as AI has led to widespread anxiety about adverse labor market impacts. This paper asks how to guide innovative efforts so as to increase labor demand and create better-paying jobs while also evaluating the limitations of such an approach. We develop a theoretical framework to identify the properties that make an innovation desirable from the perspective of workers, including its technological complementarity to labor, the relative income of the affected workers, and the factor share of labor in producing the goods involved. Applications include robot taxation, factor-augmenting progress, and task automation. In our framework, the welfare benefits of steering technology are greater the less efficient social safety nets are. As technological progress devalues labor, the welfare benefits of steering are at first increased but, but beyond a critical threshold, decline and optimal policy shifts toward greater redistribution. Moreover, as labor's economic value diminishes, steering progress focuses increasingly on enhancing human well-being rather than labor productivity. |
| JEL: | D63 E64 O3 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34994 |
| By: | Sascha O. Becker |
| 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. |
| Keywords: | Adam Smith; religion |
| JEL: | B1 B2 N3 N9 P5 Z12 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:auu:hpaper:136 |