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on Economic Growth |
| By: | Philippe Aghion; Ingvild Almås; Costas Meghir |
| Abstract: | Human capital is central to efforts to promote growth, convergence, and the elimination of poverty. Drawing on the seminal macroeconomic frameworks by Nelson-Phelps, Lucas and subsequent developments, alongside macro and microeconomic evidence, we examine the role of human capital in driving innovation and growth. We highlight how different types of human capital, characterized by education level, matter in different stages of development. Despite documented increases in years of schooling, the world’s poorest regions still see stagnating outcomes in learning and education quality, potentially creating poverty traps where investments in neither physical nor human capital materialize. We discuss obstacles to human capital accumulation through a simple analytical framework and present evidence from randomized interventions spanning early childhood programs to school-age initiatives, assessing policies that can effectively remove barriers to skill acquisition and establish foundations for sustained growth. |
| JEL: | Z0 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34602 |
| By: | Ngoc-Sang Pham; Thi Kim Cuong Pham; Trong Tin Nguyen; Cuong Le Van |
| Abstract: | We develop a dynamic endogenous-growth model with an R&D sector in which the elasticity of innovation with respect to existing knowledge can be negative. We prove the existence and uniqueness of a balanced growth path (BGP) and derive closed-form growth factors, showing that productivity and output growth are semi-endogenous and population-driven. We also establish the global stability under general production function. Under testable parameter restrictions, the economy converges to the BGP. When the knowledge elasticity is sufficiently low, a Jacobian-based condition implies instability, and an N-period innovation cycle can emerge. Comparative statics are conducted to show the role of several factors, including research efficiency, elasticity of inputs and population growth. Calibrated simulations map out transitions and mark the points at which stability is lost. They make clear when innovation frictions endanger balanced growth and provide practical guidance for R&D and demographic policy. |
| Keywords: | endogenous growth, population-driven growth, balanced growth path, stability, instability, innovation, monotone dynamical system. |
| JEL: | C62 O31 O41 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-46 |
| By: | Juan C. Córdoba; Anni T. Isojärvi; Haoran Li |
| Abstract: | This paper revisits the conditions under which search models generate balanced growth paths (BGPs)—equilibria where unemployment, vacancies, and job flows remain steady as search frictions decline. Martellini and Menzio (2020) claim that such paths exist only when matches are “inspection goods” and match quality follows a Pareto distribution. We show that these conditions are sufficient but not necessary. Their implementation assumes a strong form of stationarity—requiring the endogenous distribution of match qualities to remain invariant under proportional scaling. This restriction forces the reservation quality to grow at a constant, strictly positive rate, mechanically tying declining frictions to long-term growth and yielding counterfactual implications of eliminating search frictions—persistent unemployment and infinite welfare gains. Relaxing this restriction, balanced growth can arise under alternative forms of scaling, such as additive transformations that restore stationarity without Pareto tails or inspection. We further show that biased technological progress, when vacancies and unemployed workers are complementary inputs, also generates well-behaved BGPs with finite welfare gains and vanishing unemployment as search frictions disappear. |
| Keywords: | Search frictions; Balanced growth; Inspection models; Pareto tails; Biased technological change |
| JEL: | E24 J64 O41 |
| Date: | 2025–10–31 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-98 |
| By: | Heng-fu Zou |
| Abstract: | This paper develops a continuous-time growth model in which the central driver of modern economic progress is a cumulative stock of liberal ideas and institutions-the republican spirit of innovism. This stock combines dignity for ordinary people, liberty of entry and speech, and the prospect of fair reward, echoing the arguments of McCloskey, Phelps, Landes, and Mokyr. Liberal-ideas capital raises productivity and also enters directly into well-being by making life richer in meaning and opportunity. A share of labor is devoted to building and sustaining this liberal environment, while the rest produces goods. The model shows that long-run growth depends entirely on the growth of the liberal-ideas stock and on society's willingness to devote effort to sustaining it. Economies that place high value on dignity, openness, and creative initiative converge to paths of sustained enrichment, while those that neglect or erode liberal institutions fall into stagnation. Small differences in cultural and institutional commitment can therefore generate large and persistent differences in growth outcomes. |
| Keywords: | Republican spirit of innovism, liberal ideas capital, nonseparable preferences, endogenous growth, institutions and culture, Great Enrichment |
| JEL: | O40 O43 O11 N10 P16 Z13 |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:805 |
| By: | Stern, David I.; Common, Michael S.; Barbier, Edward B. |
| Abstract: | In this paper we critically examine the concept of the environmental Kuznets curve (EKC). This concept, most prominently promoted in the World Development Report 1992, proposes that there is an inverted U-shape relation between environmental degradation and income per capita. The concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to economic growth and in which trade has a neutral effect on environmental degradation. There are also some econometric problems with previous estimates of the EKC. The inference from the EKC estimates that further development will reduce environmental degradation is dependent on the assumption that World income is normally distributed when in fact median income is far below mean income. To illustrate the latter point we carry out a simulation under the assumption that one could actually analyze the economy-environment relationship in the way suggested by the EKC. We combine published estimates of the EKC with World Bank forecasts for long-run economic growth. The analysis shows that within the horizon of the Bank's forecast (2025) global emissions of SO2 will continue to increase. Forest loss stabilizes before the end of the period but tropical deforestation continues to proceed at a constant rate throughout the period. This is despite a near doubling in mean world income per capita. |
| Keywords: | Environmental Economics and Policy |
| URL: | https://d.repec.org/n?u=RePEc:ags:uyoarc:263933 |