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on Economic Growth |
| By: | Casal, Lucia; Caunedo, Julieta |
| Abstract: | Capital accumulation and the systematic reallocation of economic activity across sectors are two of the most salient features of economic development. These two features are interconnected through the production of various types of capital and heterogeneous usage intensity across sectors, which is summarized by the investment network. Our paper introduces the first harmonized measures of the investment network across the development spectrum and documents novel empirical regularities. We propose a simple theory linking disparities in this network to disparities in income per capita across countries. We show that Domar weights and the elasticity of output to sectorial productivity are nontrivial functions of the investment network and equilibrium sectorial investment rates. For our sample of 58 countries, we show that 33% of cross-country differences in income per capita can be accounted for by disparities in the investment network. These differences are twice as large as the role of capital in income disparities estimated through standard development accounting. |
| Keywords: | Growth |
| JEL: | E21 E23 O41 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19481 |
| By: | Krueger, Dirk; Uhlig, Harald; Li, Fulin |
| Abstract: | This paper characterizes the transition dynamics of a continuous-time neoclassical production economy with capital accumulation in which households face idiosyncratic income risk and cannot commit to repay their debt. Therefore, even though a full set of contingent claims that pay out conditional on the realization of idiosyncratic shocks is available, the equilibrium features imperfect insurance and a non-degenerate cross-sectional consumption distribution. When household labor productivity takes two values, one of which is zero, and the utility function is logarithmic, we characterize the entire transition dynamics induced by unexpected technology shocks, including the evolution of the consumption distribution, in closed form. Thus, the model constitutes an analytically tractable alternative to the standard incomplete markets general equilibrium Aiyagari (1994) model by retaining its physical environment, but replacing the incomplete asset markets structure with one in which limits to consumption insurance emerge endogenously due to limited commitment. |
| JEL: | E21 D11 D91 G22 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19471 |
| By: | Melki, Mickael; Rapoport, Hillel; Spolaore, Enrico; Wacziarg, Romain |
| Abstract: | We argue that migrants played a significant role in the diffusion of the demographic transition from France to the rest of Europe in the late 19th century. Employing novel data on French immigration from other European regions from 1850 to 1930, we find that higher immigration to France translated into lower fertility in the region of origin after a few decades - both in crossregion regressions for various periods, and in a panel setting with region fixed effects. These results are robust to the inclusion of a variety of controls, and across multiple specifications. We also find that immigrants who themselves became French citizens achieved lower fertility, particularly those who moved to French regions with the lowest fertility levels. We interpret these findings in terms of cultural remittances, consistently with insights from a theoretical framework where migrants act as vectors of cultural diffusion, spreading new information, social norms and preferences pertaining to modern fertility to their regions of origin. |
| Keywords: | Migration |
| JEL: | F22 J13 N3 O1 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19510 |
| By: | Colin Davis (Doshisha University); Ken-ichi Hashimoto (Kobe University); Ken Tabata (Kwansei Gakuin University) |
| Abstract: | This paper studies how environmental policy designed to reduce transboundary pollution affects long-run productivity growth through shifts in the geographic location of industry. We construct a two-country endogenous growth and endogenous market structure framework in which there is a positive link between the geographic concentration of industry and the strength of knowledge spillovers from production to innovation. Emissions are generated as a byproduct of production. We show that an increase in the emissions tax of the country with a larger (smaller) share of industry lowers the concentration of industry leading to weaker (stronger) knowledge spillovers and a slower (faster) rate of productivity growth. In addition, we identify cases where a rise in the emissions tax of the country with a smaller share of industry lowers emissions while increasing productivity growth. With endogenous emissions taxes, a numerical analysis shows that stronger knowledge diffusion leads to higher tax rates, faster productivity growth, and lower global emissions. In contrast, trade liberalization leads to lower tax rates and eventually raises global emissions despite faster productivity growth. Our results highlight that the relationship between productivity growth and global emissions depends critically on the form of economic integration. |
| Keywords: | Asset bubbles; Emissions Taxes, Industry Location, Knowledge Diffusion, Trade Liberalization, Productivity Growth, Global Emissions, Endogenous Market Structure, Endogenous Policy |
| JEL: | F12 O40 Q56 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:kyo:wpaper:1129 |
| By: | Federico, Giovanni; Nuvolari, Alessandro; Ridolfi, Leonardo; Vasta, Michelangelo |
| Abstract: | We present new demand-side estimates of GDP per capita for Italy and its two macro-areas, Centre-North and South for the pre-industrial period (1328-1861), based on a novel dataset including almost 95, 000 observations from 169 different locations. Our estimates confirm the chronology of the “Little Divergence†relative to the Netherlands and England. Italy maintained its leading position relative to the other European countries and was overtaken by France and Germany only in the first half of the 19th century. GDP per capita trends differed between Centre-North and South determining a “slow-motion†divergence from the 15th century to the political unification. |
| Keywords: | Italy; Gdp per capita; demand side approach; regional divergence |
| JEL: | N13 E01 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19406 |
| By: | Shantayanan Devarajan (Georgetown University; Center for Global Development) |
| Abstract: | Noting that the recent performance of developing countries is significantly worse than it was in the first decade and a half of this century, this paper suggests that the latter may have contributed to the former. Drawing on cases from the Middle East, Africa, and South Asia, I show how rapid growth and poverty reduction can lead policymakers and the international community to deny the existence of governance problems such as corruption and elite capture. When this denial increases distrust between citizens and the government, it often leads to political and economic turmoil that can result (and has resulted) in civil wars, instability, and a slowdown in economic growth. Moreover, growth-fueled denial works against transparency, which is an important tool for addressing governance problems. It also represents a lost opportunity to build domestic consensus for reform, which is easier during periods of economic growth. In sum, the costs of denial are huge. |
| Keywords: | economic growth, corruption, political economy |
| JEL: | O40 D73 P00 |
| Date: | 2026–06–01 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:wpaper:747 |
| By: | Konstantin A. Kholodilin; Jan-Christopher Scherer |
| Abstract: | The capital stock in Germany and other advanced economies has been aging persistently since 1970s, raising concerns about its implications for productivity, economic growth, and resilience. This study investigates the relationship between capital stock modernity and productivity dynamics using a panel dataset covering 24 European countries between 1997 and 2020. We employ a panel local projections model with split-panel jackknife corrections to address the Nickell-type bias inherent in dynamic panel models with fixed effects. Our analysis controls for human capital, research and development, trade openness, institutional quality, and financial development. The results show that improvements in capital stock modernity exert a positive and statistically significant effect on both total factor productivity (TFP) and labor productivity, although the timing of these effects varies across measures. Specifically, labor productivity growth responds immediately to capital modernization, whereas potential TFP growth increases only from the second year following the shock. |
| Keywords: | Total factor productivity, labor productivity, capital stock, modernity grade |
| JEL: | C23 E22 O47 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2176 |