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on Economic Growth |
| By: | HE, XIULEI |
| Abstract: | When population growth stalls and per capita consumption of physical goods approaches saturation, traditional supply-side growth models fail to explain the persistent slowdown in advanced economies. This paper introduces the concept of demand iteration speed, defined as the frequency with which a given product or service is repurchased per unit time, and embeds it into a national-accounting decomposition of consumption expenditure. The growth rate of consumption is shown to equal the sum of population growth, growth in per-transaction consumption volume, and growth in average iteration speed. This decomposition reveals that in the post-growth era, iteration speed becomes the decisive structural variable for economic growth, providing a unified lens to interpret the historical succession of growth engines from durable infrastructure to high-frequency digital services. We apply this framework to Hong Kong, a mature small open economy, and identify four high-iteration sectors that can support its long-term growth. |
| Keywords: | consumption frequency, demand iteration, economic growth, structural change, post-growth economy, Hong Kong |
| JEL: | A1 |
| Date: | 2026–05–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129078 |
| By: | Ozili, Peterson K |
| Abstract: | This study examines the asymmetric effect of artificial intelligence (AI) innovation on economic growth in 50 countries from 2000 to 2020 using the quantile regression method. The findings reveal that AI innovation stimulates economic growth at low and middle tail of the economic growth distribution. Interaction analyses reveal that the use of AI innovation in the stock market stimulates economic growth while the use of AI innovation to support financial stability and international trade activities diminish economic growth. Asymmetric interaction analyses reveal that: AI innovation stimulates economic growth when countries are experiencing low growth rates; the use of AI innovation in the stock market stimulates economic growth when countries are experiencing high growth rates and in mid-growth emerging market and developing countries; the use of AI innovation to support financial stability activities diminish economic growth when countries are experiencing low growth rates and the use of AI innovation to support international trade activities diminish economic growth when countries are experiencing high growth rates. |
| Keywords: | Quantile regression, asymmetry, economic growth, artificial intelligence, innovation, internet, financial stability, unemployment, trade openness, endogenous growth theory |
| JEL: | O30 O31 O33 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:128950 |
| By: | Wolfgang Kuhle |
| Abstract: | This paper investigates the conditions under which the Easterlin hypothesis holds within a neoclassical overlapping generations model with endogenous capital accumulation, wages, interest rates, and fertility. We develop a tractable analytical framework that maps economic transitions into utility space via a continuously differentiable first-order difference equation for cohort lifetime utilities. This reformulation allows for a transparent normative evaluation of non-steady-state paths without requiring explicit solutions to the underlying nonlinear system. Within this framework, we show that when fertility cycles emerge and children are normal goods, the utility of small cohorts strictly exceeds that of large cohorts. Crucially, this cohort-welfare asymmetry is driven by fertility preferences and is independent of the economy's position relative to the golden rule. |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2606.02362 |
| By: | Sang-Ha Yoon (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)) |
| Abstract: | The Demographic Shock and the Productivity Imperative<p> The global economy is undergoing a profound transformation driven by low birth rates and aging populations. While this demographic shift is a global phenomenon, South Korea is experiencing it at an unprecedented speed. This change is not merely a social issue but a fundamental economic shock that alters the core engines of growth: labor and capital.<p> As the working-age population shrinks, the contribution of labor to economic growth inevitably turns negative. Consequently, sustaining economic growth depends entirely on productivity. The central challenge for policymakers is no longer just how to expand the workforce, but how to reconfigure the economy to produce more with fewer people through innovation and efficiency.<p> This report analyzes the impact of demographic changes on Korea's productivity, drawing lessons from Japan’s experience and utilizing economic simulations. It explores how aging affects investment incentives and why “intangible assets”—such as technology, software, and organizational know-how—are critical for Korea's economic survival. Furthermore, it highlights how global financial conditions can act as a buffer for Korea's open economy. |
| Keywords: | Global Demographic Change; Global Spillover; Productivity |
| Date: | 2026–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:ris:kiepwe:022504 |
| By: | Omer Majeed |
| Abstract: | This study examines how institutions condition the impact of population growth on poverty. This question is important given the rapid population growth of recent decades and projections that the global population will increase by two to three billion people by 2100, largely in countries with weak to moderate institutions. The paper shows how institutions determine whether additional population becomes equipped with human capital and avoids poverty, or remains in subsistence, contributing to higher poverty. The paper develops a model of heterogeneous neighborhoods and the public provision of educational services. The model generates predictions that the paper tests in a cross-country setting. Consistent with the framework, the results suggest that institutions condition how population growth impacts poverty. The results are robust across empirical strategies -- OLS, GMM, and an IV approach -- and across poverty and institution definitions. The analysis shows that investment, education, and healthcare are three possible channels for this mechanism. |
| Keywords: | institutions, population growth, poverty, economic growth |
| JEL: | D02 I32 O11 O43 J11 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2026-44 |
| By: | Filip, Marinela-Daniela; Setzer, Ralph; Peréz-González, Diego |
| Abstract: | This paper examines whether differences in the composition of investment help explain economic growth disparities in the EU and other advanced economies from 1996 to 2021. While overall investment levels in the EU and the US are broadly similar, the EU invests less in intangible and tangible ICT capital. This difference in composition is associated with part of the EU’s productivity gap with the US. Employing panel fixed effects and local projection methods, we find that intangible and tangible ICT investments -particularly in communications equipment, R&D, and other intellectual property products- are associated with higher GDP per capita growth than other forms of investment. To quantify these differences, we construct a novel investment efficiency ratio that relates the estimated economic growth contribution of each asset to its share in total investment. The results are robust across empirical methods, country samples, and time periods, and reveal substantial heterogeneity: the growth association of ICT-related investment is stronger in countries with higher income levels and greater human capital. Overall, the findings suggest that improving the allocation and efficiency of investment, rather than simply increasing its volume, is key to enhancing long-term growth. JEL Classification: E22, O47, O50, J24, C23 |
| Keywords: | intangible investment, investment efficiency, investment human capital, panel data, tangible ICT |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263242 |
| By: | Kopytov, Alexandr; Taschereau-Dumouchel, Mathieu; Xu, Zebang |
| Abstract: | We develop a general equilibrium model in which firms choose how scalable their production technologies are. More scalable technologies make it easier for firms to expand output but are less effective at small scale. In equilibrium, more productive firms adopt more scalable technologies and grow disproportionately large. As a result, the tail of the size distribution becomes thicker and, as resources reallocate to the most productive producers, GDP increases. Over the long-run, as aggregate productivity rises, firms adopt more scalable technologies, which lowers input prices, leading to further increases in scalability. Through this supply-chain amplification process, endogenous returns to scale raise the growth rate of GDP. A calibrated version of the model shows that these effects are quantitatively significant. We also document support for the model's predictions in firm-level data. |
| Keywords: | returns to scale, scalability, technology |
| JEL: | E23 D24 D57 O40 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:341038 |
| By: | Hiroyuki Yamada (Keio University) |
| Abstract: | Low- and middle-income countries are currently experiencing fertility declines at earlier developmental stages than historical precedents. However, the specific economic threshold at which fertility falls below the replacement level (2.1) remains under-analyzed. This study utilizes a comprehensive dataset to systematically visualize this threshold and quantify the economic discrepancy between historical and modern transitions. We demonstrate that today's developing economies reach the replacement level at significantly lower income levels than high-income economies did. This acceleration is driven by the rapid diffusion of health and education best practices and urbanization. Consequently, these nations face the dual challenge of "premature aging" and underdeveloped institutions. We conclude that sustainable development strategies must urgently shift from simple population control to building resilient social systems capable of withstanding these demographic headwinds. |
| Keywords: | Fertility decline, Demographic transition, Sustainable development, Premature aging, Replacement level fertility |
| JEL: | O1 O5 J13 |
| Date: | 2026–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2026-011 |
| By: | Preyer Elisabeth; Kalcheva Desislava; Curtale Riccardo (European Commission - JRC); Tucci Michele (European Commission - JRC); Kučas Andrius; Bel Germà; Damian Alexandru Cristian; Łukomska Julita; Šķiltere Sanita; Chtioui Matthieu; Hesse Mario; Starke Tim; Lyytikäinen Teemu; Loiacono Luisa; Secomandi Riccardo; Gastaldi Francesca; Ferreira Joana; Sirvydis Viktoras; Kálmán Judit; Käärmann-liive Kaimo; Runtic Dario; Petrovici Norbert; Houlberg Kurt; Ramberg Ulf; Turley Gerard; Herrmann Benedikt (European Commission - JRC); Agundez Garcia Ana (European Commission - JRC); Von Ehrlich Maximilian; Sedmihradská Lucie |
| Abstract: | Municipalities shoulder the burden of creating business-friendly environments – managing infrastructure, navigating public resistance, and investing countless hours in smoothing the path for economic development. Yet, the rewards often flow elsewhere. Local taxes on economic activity offer a powerful solution. While a thriving local economy boosts budgets, different taxes shape municipal decision-making in distinct ways. This report examines how various type of taxes can serve as rewards for local economic development. To compare municipal tax revenues across countries, it introduces three dedicated indicators. To illustrate real-world impact, three case studies demonstrate how the sharing of direct taxes can catalyse local growth. Furthermore, there are strong indications that voluntary tax compliance rises when revenues remain local. In other words, rewarding local governments through tax sharing is a potential driver of both economic growth and fiscal compliance – benefiting citizens, businesses, and governments at all levels. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145286 |