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on Economic Growth |
| By: | Tania Babina; Asaf Bernstein; Filippo Mezzanotti |
| Abstract: | The effect of financial crises on innovation is an unsettled and important question for economic growth, but one difficult to answer with modern data. Using a differences-in-differences design surrounding the Great Depression, we document that local distress caused a sudden and persistent decline in patenting by the largest organizational form of innovation at this time—technological entrepreneurs. Parallel trends prior to the shock, evidence of a drop within every major technology class, and consistent results using distress driven by commodity shocks—all suggest a causal effect of distress. Despite this, we find that innovation during crises can be more resilient than it may appear at first glance. First, there is no observable change in the number of future citations, despite the decline in the number of patents filed. Second, the shock is in part absorbed through a reallocation of inventors into firms, who over the long-run produce patents with greater impact. Third, the results reveal no immediate brain drain of inventors from the affected areas. Overall, we demonstrate that crises can be both destructive and creative forces for innovation, and provide the first systematic evidence of the role played by the Great Depression in the long-run organization of innovative activity. |
| JEL: | G01 G21 N12 N22 N32 O3 |
| Date: | 2020–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27851&r=all |
| By: | Aditya Goenka (University of Birmingham); Lin Liu (University of Liverpool); Nguyen, Manh-Hung (Toulouse School of Economics) |
| Abstract: | This paper studies an optimal growth model where health expenditures (alternatively lockdowns) can be made to reduce infectivity of the disease when there is an infectious disease with SIR dynamics and infections can cause disease related mortality. We study implications of two different SIR models - with early mortality and with late mortality from the disease - on health outcomes, optimal response and on economic outcomes in equilibrium. We characterize the steady states and show how these vary when varying mortality. The outcomes are sensitive to the specification of the epidemiology model. We also study sufficiency conditions and provide the first results in economic models with SIR dynamics with and without disease related mortality - a class of models which are non-convex and have endogenous discounting so that no existing results are applicable. |
| Keywords: | Infectious diseases, Covid-19, SIR model, mortality, sufficiency conditions, economic growth, lockdown, prevention, health expenditure. |
| JEL: | E13 E22 D50 D63 I10 I15 I18 O41 C61 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:20-25&r=all |
| By: | Nhabinde, Simeão; Heshmati, Almas |
| Abstract: | The Southern African Development Community (SADC) countries are rich in natural resources and in most of them their extractive industries extract and export natural resources with little industrial processing. This study analyzes the direct and indirect impacts that the extractive industries in the SADC countries have on their economic growth. The study also examines the hypothesis of economic convergence. Its empirical results are based on data from the 11 founding SADC countries covering the period 2004-17. The results show that despite the process of integration, the SADC economies do not converge in terms of per capita incomes. The extractive industries have direct negative impacts on the countries’ economic growth thus providing evidence of a resource curse. Extractive industries in South Africa, Botswana, and Namibia have positive direct impacts on their economic growth. However, in terms of indirect impacts, the extractive industries do not have any impact on GDP because their impact on manufacturing, human capital, public expenditure, economic openness, exchange rate, and inflation is insignificant. The study also shows that GDP, the colonial path followed by these countries, and inflation have a negative but insignificant impact on extractive industries, while manufacturing, government expenditure, and economic openness have positive but insignificant impacts in all SADC countries. Human capital and exchange rate are the only factors that have both significant positive and negative impacts on economic growth, respectively. |
| Keywords: | SADC,Extractive industry,Growth impact,Natural resources,Resource curse,Africa |
| JEL: | N57 Q13 P48 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:656&r=all |
| By: | Aditya Goenka (University of Birmingham); Lin Liu (University of Liverpool); Nguyen, Manh-Hung (Toulouse School of Economics) |
| Abstract: | This paper studies optimal quarantines (can also be interpreted as lockdowns or selfisolation) when there is an infectious disease with SIS dynamics and infections can cause disease related mortality in a dynamic general equilibrium neoclassical growth framework. We characterize the optimal decision and the steady states and how these change with changes in effectiveness of quarantine, productivity of working from home, contact rate of disease and rate of mortality from the disease. A standard utilitarian welfare function gives the counter-intuitive result that increasing mortality reduces quarantines but increases mortality and welfare while economic outcomes and infections are largely unaffected. With an extended welfare function incorporating welfare loss due to disease related mortality (or infections generally) however, quarantines increase, and the decreasing infections reduce mortality and increase economic outcomes. Thus, there is no optimal trade-off between health and economic outcomes. We also study sufficiency conditions and provide the first results in economic models with SIS dynamics with disease related mortality - a class of models which are non-convex and have endogenous discounting so that no existing results are applicable. |
| Keywords: | Infectious diseases, Covid-19, SIS model, mortality, sufficiency conditions, economic growth, lockdown, quarantine, self-isolation. |
| JEL: | E13 E22 D50 D63 I10 I15 I18 O41 C61 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:20-24&r=all |
| By: | Gilbert Cette (Banque de France and Aix Marseille Univ, CNRS, AMSE, Marseille, France); Aurélien Devillard (Aix Marseille Univ, CNRS, AMSE, Marseille, France); Vincenzo Spiezia (OECD) |
| Abstract: | Using a new and original database, our paper contributes to the growth accounting literature with three original aspects: first, it covers a long period from the early 60's to 2019, just before the COVID-19 crisis; second, it analyses at the country level a large set of economies (30); finally, it singles out the growth contribution of ICTs but also of robots. The original database used in our analysis covers 30 developed countries and the Euro Area over a long period allowing to develop a growth accounting approach from 1960 to 2019. This database is built at the country level. Our growth accounting approach shows that the main drivers of labor productivity growth over the whole 1960-2019 period appear to be TFP, non-ICT and non-robot capital deepening, and education. The overall contribution of ICT capital is found to be small, although we do not estimate its effect on TFP. The contribution of robots to productivity growth through the two channels (capital deepening and TFP) appears to be significant in Germany and Japan in the sub-period 1975-1995, in France and Italy in 1995-2005, and in several Eastern European countries in 2005-2019. Our findings confirm also the slowdown in TFP in most countries from at least 1995 onwards. This slowdown is mainly explained by a decrease of the contributions of the components 'others' in the capital deepening and the TFP productivity channels. |
| Keywords: | growth, productivity, ICTs, robots |
| JEL: | O31 O33 O47 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2033&r=all |
| By: | Sasaki, Hiroaki; Sonoda, Ryunosuke |
| Abstract: | This study builds a North-South trade and growth model, and investigates the effect of a change in each country's income distribution on both countries' economic growth. The North is assumed to be a demand-led Kalecki-type economy in which the markup pricing rule and the principle of effective demand prevail, while the South is a supply-led Lewis-type economy in which surplus labor prevails and hence, the real wage is fixed. Moreover, it is assumed that the markup rate of North firms is influenced by international competition. The following four main results are obtained. First, in the short-run equilibrium, an increase in the distributive shift parameter of the North increases (decreases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the distributive shift parameter of the North also necessarily decreases the economic growth rate of the South. Second, in the short-run equilibrium, an increase in the profit share of the South decreases (increases) the economic growth rate of the North if the North exhibits profit-led (wage-led) growth. Such an increase in the profit share of the South can either increase or decrease the economic growth rate of the South. Third, in the long-run equilibrium, an increase in the distributive shift parameter of the North decreases (increases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium. Fourth, in the long-run equilibrium, an increase in the profit share of the South increases (decreases) the economic growth rates of the North and the South if the North exhibits wage-led (profit-led) growth in the short-run equilibrium. |
| Keywords: | North-South trade; Thirlwall's law; uneven development; income distribution |
| JEL: | F43 O11 O41 |
| Date: | 2020–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:103004&r=all |
| By: | Bajo-Rubio, Oscar |
| Abstract: | Foreign direct investment (FDI) has played a major role in the deep process of transformation experienced by the Spanish economy since the first 1960s, which even intensified following the integration with the now European Union (EU) in 1986. In this paper, we analyse the long-run effects of FDI in Spain, by estimating a production function including the foreign capital stock over the period 1964-2013. We find a significant contribution of foreign capital on the accumulated growth of GDP over the period of analysis, which seems however to have been greater during the first years of the period analysed. |
| Keywords: | Economic growth,Foreign direct investment |
| JEL: | F21 F43 O40 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:676&r=all |