|
on Economic Growth |
| By: | Oded Galor; Marc Klemp; Daniel C. Wainstock |
| Abstract: | Why does inequality vary across societies? Why are some societies more unequal than others? We advance the hypothesis that in a market economy, where income differentials reflect variations in productive traits, a significant share of cross-societal differences in inequality may reflect enduring variation in the degree of diversity within societies, rooted in the prehistoric Out-of-Africa migration. Patterns of inequality within the U.S. population are consistent with this hypothesis, suggesting that disparities among groups originating from different ancestral societies may be related to the degree of diversity within those societies, shaped during humanity's dispersal from Africa. Consistent with the proposed mechanism, populations whose ancestors originated closer to East Africa tend to exhibit greater dispersion in productive traits-education, ability, and labor supply-channels that appear to mediate the relationship between diversity and inequality. |
| Keywords: | Inequality, Diversity, Culture, Education, Entrepreneurship, Out-of-Africa Migration |
| JEL: | D60 O10 Z10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2552 |
| By: | Fernando E. Alvarez; Francisco J. Buera; Nicholas Trachter |
| Abstract: | We study optimal policy in a dynamic general equilibrium model where heterogeneous monopolistic competitive firms pay a fixed cost to adopt a frontier technology that grows exogenously. Using Mean Field Games tools, we show that the optimal policy consists of exactly two time-invariant subsidies: one correcting the static misallocation from market power, and one correcting the dynamic under-incentive to adopt. This holds outside of balanced growth paths, for any initial distribution of technology gaps. We analyze a simplified version of the model that aggregates to a Neoclassical Growth Model with an S-shaped production function whenever complementarities are strong, and fully characterize when the optimal policy uniquely implements the first best. When it does not, two novel results emerge: the efficient allocation prescribes escaping a poverty trap—providing an explicit optimality foundation for a Big Push—and, more surprisingly, escaping an abundance trap, where dismantling adopted technologies is optimal. In both cases, a temporary, costless supplementary policy restores unique implementation. |
| JEL: | D92 O14 O25 O40 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35133 |
| By: | Velazco, Jacqueline |
| Abstract: | Peru, a small open economy, has experienced recurrent cycles of crisis and recovery closely linked to shifts in external demand. Its long-run growth pattern is characterised by primary commodity exports and manufactured imports. Development strategies since the late nineteenth century can be broadly grouped into: primary export diversification, import-substituting industrialisation, and, from 1990 onwards, the promotion of non-traditional exports. Against this backdrop, the paper aims to address, from a long-term perspective, the question of the role of agriculture in Peru's growth process for the period 1896-2012. To achieve this, two analyses were conducted. The first aims to identify the relationship between agricultural GDP, industrial GDP, mining GDP, and other sectors, including services and energy. It is assumed that these sectors represent the state of urban development, and it is of interest to understand their level of interaction with agriculture. The second analysis aims to empirically verify the export-led growth (ELG) hypothesis and the import-led growth hypothesis (ILG). Time-series co-integration techniques were employed. Econometric findings pointed out a negative relationship between agriculture and industry. The paper identifies bidirectional links between agriculture and urban sectors (services and energy), with food flows, migration and labour markets connecting rural households’ diversified livelihoods to city-based employment. It also finds that Peru exhibits both export-led and import-led growth dynamics: agricultural and non-agricultural exports, together with imports of inputs and capital goods, jointly underpin a feedback relationship between trade and long-run economic growth. |
| Keywords: | Financial Economics |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aes026:397898 |
| By: | Tom Davidson; Basil Halperin; Thomas Houlden; Anton Korinek |
| Abstract: | AI labs are increasingly using AI itself to accelerate AI research, creating a feedback loop that could lead to an intelligence explosion. We develop a general semi-endogenous growth model with an innovation network, where research and automation in one sector increase the productivity of research in other sectors, and derive a clean analytical condition under which growth becomes superexponential (``explosive''). We find that automating research can offset diminishing returns to ideas by activating two reinforcing channels: a technological feedback loop across research sectors, and an economic feedback loop in which higher output finances further research. Growth becomes explosive if the combined strength of technological and economic feedback loops overcomes diminishing returns. In a simple simulation calibrated to trends in AI progress, fully automating software research and modest (5%) automation in other sectors generates a singularity within six years. Bottlenecks do not overturn the result if task automation advances sufficiently fast. |
| JEL: | O31 O33 O40 O41 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35155 |
| By: | Miguel Faria-e-Castro; Pascal Paul; Juan M. Sanchez |
| Abstract: | Should firms in financial distress be saved to stabilize an economy, even if less productive ones are kept alive, possibly reducing economic growth? To assess this fundamental stabilization-vs. growth trade-off, we develop a new dynamic general equilibrium model with business cycles, endogenous growth, and innovation externalities. We discipline key parameters using microeconomic data and an instrumental-variable approach that links firm productivity growth to R&D expenditure. Based on the calibrated model, we find that economies that save distressed firms with credit guarantees, debt restructuring, or loan evergreening experience lower volatility but also slower growth. Even though welfare is higher in an economy without such interventions, the various “soft credit” regimes can still arise as equilibrium outcomes when a benevolent government intervenes in credit markets under discretion. |
| Keywords: | business cycles; endogenous growth; financial frictions |
| JEL: | E43 E44 E60 G21 G32 |
| Date: | 2026–04–29 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:103111 |
| By: | Giuliano, Paola (University of California, Los Angeles) |
| Abstract: | This chapter reviews the growing literature on the origin, persistence and evolution of cultural norms. I begin by examining the deep historical forces that shape the formation of cultural norms, with particular attention to the role of geography, pre-industrial societal characteristics, political institutions, and historical shocks. I then analyze the mechanisms through which cultural norms persist and evolve, emphasizing the roles of vertical, horizontal, and oblique transmission. Next, I examine the complex interaction between culture and institutions, and discuss the conditions under which cultural norms change. Several conclusions emerge. Cultural norms tend to persist over remarkably long periods, though the speed of change varies significantly across traits. Understanding the origins and persistence of cultural norms has important implications for policy: policies that ignore local cultural context risk failure or unintended consequences, while well-designed interventions can successfully shift norms. Finally, I discuss the growing evidence on cultural mismatches - situations where norms that were adaptive in historical environments become maladaptive in new contexts - and outline directions for future research. |
| Keywords: | cultural norms, cultural evolution, historical persistence |
| JEL: | Z1 P0 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18583 |