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on Economic Growth |
| By: | Payne Hennigan |
| Abstract: | I develop a dynamic model of how internal capital markets in conglomerates respond to liquidity shocks when affiliated firms vary in innovation potential. A two-stage framework defines cutoff rules for when the conglomerate should liquidate low-productivity firms, coerce intermediate types into short-termist strategies, or preserve high-potential firms for long-horizon R&D. Embedding these margins into an endogenous growth model, I show how the optimal policy evolves: early in development, coercion preserves liquidity while sustaining broad innovation; as the economy nears the frontier and short-term returns decline, the optimal strategy shifts toward binary reallocation between liquidation and long-termism. I characterize two policy failures: a "coercion trap, " where short-termism persists too long, and a "liquidation fallacy, " where viable firms are discarded prematurely. The framework provides microfoundations for dynamic reallocation in conglomerate systems and offers policy insights for crisis-era restructuring. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.13993 |
| By: | Lucian Liviu ALBU (Institute for Economic Forecasting, Romanian Academy); Ada Cristina ALBU (Institute for World Economy, Romanian Academy.) |
| Abstract: | The birth rate is one of the key demographic indicators and by its major impact on labour force and employment it is in a strong positive correlation with economic growth. Based on available data for various periods, we are analysing the complex dynamics of demographic balance both at the global level and the EU’s level. At the global level, empirical data demonstrate the existence of two general strong processes of convergence: for the natality towards a birth rate of 10 crude, per 1000 people and for the mortality towards a death rate of 7 crude, per 1000 people. In case of the EU’s level, our study is demonstrating that the demographic balance is equilibrated by the emigration phenomenon. Our study demonstrates the existence of three distinctive trajectories, along with the income per inhabitant growth. Each of them is corresponding to a so-called behavioural regime and the transition between regimes seems to occur “naturally†when the level of development is increasing. Moreover, a model allowing a smooth transition between the empirical trends corresponding to the three groups of states (classified by their income per capita: low, middle, and high) is presented. |
| Keywords: | Demographic Balance, Birth Rate, Death Rate, Behavioural Regime.; Demographic Balance, Birth Rate, Death Rate, Behavioural Regime |
| JEL: | J11 C13 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:rjr:wpiecf:250701 |
| By: | Craig A. Chikis; Benny Kleinman; Marta Prato |
| Abstract: | Most U.S. innovation output originates from firms that operate R&D facilities across multiple local markets. We study how this geographic structure influences aggregate innovation and growth, and whether it is socially optimal. First, we develop an endogenous growth model featuring multi-market innovative firms that generate knowledge spillovers to geographically proximate firms. In equilibrium, firms may operate in too few or too many local markets, depending on how sensitive are the local spillovers they generate to their local size. Second, to quantify these effects, we link the model to data on firms’ R&D locations, patents, and citation networks. Using an event-study design, we show that firms’ spatial expansion increases spillovers to other firms and estimate how these spillovers depend on a firm's local footprint. Our estimates imply that U.S. innovative firms operate in too few markets relative to the social optimum. Third, using quantitative counterfactuals, we find that policies promoting broader spatial scope yield larger welfare gains than standard R&D subsidies. Moreover, unlike R&D subsidies, such policies can also reduce regional inequality. |
| JEL: | E0 F0 L0 O0 R0 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34010 |
| By: | Terzi, A.; Ramsay, A. |
| Abstract: | As climate change intensifies, it is expected to affect countries across the globe in highly heterogeneous ways, depending on each nation's geographical location and level of development. Yet, most long-term economic projections do not take this factor explicitly into account. Could climate-induced weather events shape the relative wealth – and therefore geopolitical clout – of countries over the 21st century? In this paper, we present GDP projections for 164 countries between 2025 and 2100 under different SSP-RCP scenarios. Three fundamental conclusions emerge. First, under any climate scenario, the world is heading towards a multipolar equilibrium, with the US, China and Europe remaining the dominant economic blocs. India is on the rise, but is not currently expected to match the scale of these three by century’s end. Second, the global concentration of GDP is projected to decline, indicating increasing potential for geopolitical fragmentation and a relative "rise of the Rest". Third, a scenario marked by heightened geopolitical rivalry would exacerbate climate damages and harm growth in all countries, but particularly so for emerging markets, making China's surpassing of the US even more unlikely. Despite the large direct nominal losses arising from climate change, our results suggest that its indirect effects—through slower productivity growth and demographic shifts—will be even more consequential in shaping the future wealth of nations. |
| Keywords: | Climate Change, Geopolitics, Socio-Economic Pathways, Economic Growth, International Political Economy |
| JEL: | F02 F52 O44 O47 Q56 |
| Date: | 2025–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camdae:2548 |
| By: | Barros, Fernando; Delalibera, Bruno; Ribeiro, Marcos |
| Abstract: | This paper examines the relationship between economic complexity and industrial robot adoption. Using panel data for 61 countries from 1996 to 2022, we find that higher robot density is significantly associated with greater economic complexity. This positive relationship remains robust after controlling for per capita income, human capital, institutional quality, and other relevant factors. Notably, the complexity-enhancing effect of robots is stronger in countries with a larger share of low-skilled workers. |
| Keywords: | economic complexity robot density economic development |
| JEL: | O33 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125125 |
| By: | Ver\'onica B\"acker-Peral; Vitaly Meursault; Christopher Severen |
| Abstract: | Multimodal LLMs offer a watershed change for the digitization of historical tables, enabling low-cost processing centered on domain expertise rather than technical skills. We rigorously validate an LLM-based pipeline on a new panel of historical county-level vehicle registrations. This pipeline is 100 times less expensive than outsourcing, reduces critical parsing errors from 40% to 0.3%, and matches human-validated gold standard data with an $R^2$ of 98.6%. Analyses of growth and persistence in vehicle adoption are statistically indistinguishable whether using LLM or gold standard data. LLM-based digitization unlocks complex historical tables, enabling new economic analyses and broader researcher participation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.11599 |