|
on Economic Growth |
| By: | Uwe Sunde; Thomas Dohmen; Benjamin Enke; Armin Falk; David Huffman; Gerrit Meyerheim |
| Abstract: | This paper studies the relationship between patience and comparative development through a combination of reduced-form analyses and model estimations. Based on a globally representative dataset on time preference in 76 countries, we document two sets of stylized facts. First, patience is strongly correlated with per capita income and the accumulation of physical capital, human capital and productivity. These correlations hold across countries, subnational regions, and individuals. Second, the magnitude of the patience elasticity strongly increases in the level of aggregation. To provide an interpretive lens for these patterns, we analyze an OLG model in which savings and education decisions are endogenous to patience, aggregate production is characterized by capital-skill complementarities, and productivity implicitly depends on patience through a human capital externality. In our model estimations, general equilibrium effects alone account for a non-trivial share of the observed amplification effects, yet meaningful externalities are needed to quantitatively match the empirical evidence. |
| Keywords: | Time Preference, Comparative Development, Factor Accumulation |
| JEL: | D03 D90 O10 O30 O40 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2021_293&r= |
| By: | Priyaranjan Jha; Karan Talathi |
| Abstract: | We study the implications of two historical institutions, direct British rule, and the heterogeneous land tenure institutions implemented by the British, on disparity in present day development using district level data from India. Using nightlights per capita as a proxy for district level per capita income, we find that modern districts that were historically under direct British rule had 39.47% less nightlights per capita in 1993 relative to modern districts that were historically under indirect British rule. The large gap persists even after including other controls such as educational attainment, health, and physical infrastructure. Looking at the growth pattern during 1993 to 2013, directly ruled districts had a 1.84% lower annual growth rate compared to indirectly ruled districts. As well, directly ruled districts were converging at a rate of 2% per year while indirectly ruled districts were converging at a rate of 5.7% per year. Much of the development gap between areas under indirect rule and direct rule can be accounted for by the adverse effect of landlord-based revenue collection system in the directly ruled areas. |
| Keywords: | institutions, direct British rule, economic growth, nightlights per capita, land tenure system, economic development, human capital |
| JEL: | O11 O43 P16 P51 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9031&r= |
| By: | Stephen Broadberry (Nuffield College Oxford, CAGE and CEPR) |
| Abstract: | As a result of recent work on historical national accounting, it is now possible to establish more firmly the timing of the Great Divergence of living standards between Europe and Asia in the eighteenth century. There was a European Little Divergence as Britain and the Netherlands overtook Italy and Spain, and an Asian Little Divergence as Japan overtook China and India. The Great Divergence occurred because Japan grew more slowly than Britain and the Netherlands starting from a lower level, and because of a strong negative growth trend in Qing dynasty China. A growth accounting framework is used to assess the contributions of labour, human and physical capital, land and total factor productivity. In addition to these proximate sources, the roles of institutions and geography are examined as the ultimate sources of the divergent growth patterns. |
| Keywords: | Great Divergence; living standards; measurement; explanation JEL Classification: N10, N30, N35, O10, O57 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:549&r= |
| By: | Kersting, Felix (HU Berlin); Wohnsiedler, Iris (HU Berlin); Wolf, Nikolaus (HU Berlin) |
| Abstract: | We revisit Max Weber's hypothesis on the role of Protestantism for economic development. We show that nationalism is crucial to both, the interpretation of Weber's Protestant Ethic and empirical tests thereof. For late 19th century Prussia we reject Weber’s suggestion that Protestantism mattered due to an “ascetic compulsion to save”. Moreover, we find that income levels, savings, and literacy rates differed between Germans and Poles, not between Protestants and Catholics using pooled OLS and IV regressions as well as IV mediation analysis. We suggest that this result is due to anti-Polish discrimination. |
| Keywords: | Max Weber; protestantism; nationalism; |
| JEL: | N13 N33 O16 Z12 |
| Date: | 2019–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:rco:dpaper:199&r= |
| By: | Simon Accorsi |
| Abstract: | This paper studies the relationship between democracy and economic growth with a time series approach. For a number of Latin America and European countries we estimate the long term effect of a democratic shock on the per capita GDP growth rate. The starting point is an Autoregressive Vector (VAR) acting as general unrestricted model (GUM). This general model is subjected through an automatic reduction process using a General to Specific (GETS) algorithm. This methodology ensures the weak exogeneity of the variables with respect of the parameters of interest and allows to investigate the strong exogeneity. Results show no clear patterns for the relation between political regime and economic performance, which is indicative of a country-specific relationship. In the Chilean case, a democratic shock takes 4 years to have a positive impact on the growth rate of GDP per capita. The maximum effect is reached after 10 years. |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp515&r= |
| By: | Palma, Nuno (University of Manchester; ICS, Universidade de Lisboa; CEPR & CAGE); Reis, Jaime (ICS, Universidade de Lisboa); Rodrigues, Lisbeth (ISEG, Universidade de Lisboa) |
| Abstract: | Gender discrimination has been pointed out as a determining factor behind the long-run divergence in incomes of Southern vis-Ã -vis Northwestern Europe. In this paper, we show that there is no evidence that women in Portugal were historically more discriminated against than those of other parts of Western Europe, including England and the Netherlands. We rely on a new dataset of thousands of observations from archival sources which cover six centuries, and we complement it with a qualitative discussion of comparative social norms. Compared with Northwestern Europe, women in Portugal faced similar gender wage gaps, married at similar ages, and did not face more restrictions to labor market participation. Consequently, other factors must be responsible for the Little Divergence of Western European incomes. |
| Keywords: | Historical gender discrimination, gender wage gap, culture, social norms, comparative development, the Little Divergence, European Marriage Pattern. JEL Classification: N13, N33, J16 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:551&r= |
| By: | Christopher Boudreaux; Anand Jha; Monica Escaleras |
| Abstract: | This study examines how foreign aid and institutions affect entrepreneurship activity following natural disasters. We use insights from the entrepreneurship, development, and institutions literature to develop a model of entrepreneurship activity in the aftermath of natural disasters. First, we hypothesize the effect of natural disasters on entrepreneurship activity depends on the amount of foreign aid received. Second, we hypothesize that natural disasters and foreign aid either encourages or discourages entrepreneurship activity depending on two important institutional conditions: the quality of government and economic freedom. The findings from our panel of 85 countries from 2006 to 2016 indicate that natural disasters are negatively associated with entrepreneurship activity, but both foreign aid and economic freedom attenuate this effect. In addition, we observe that foreign aid is positively associated with entrepreneurship activity but only in countries with high quality government. Hence, we conclude that the effect of natural disasters on entrepreneurship depends crucially on the quality of government, economic freedom, and foreign aid. Our findings provide new insights into how natural disasters and foreign aid affect entrepreneurship and highlight the important role of the institutional context. |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2104.12008&r= |
| By: | Ndiweni, Zinzile Lorna; Bonga-Bonga, Lumengo |
| Abstract: | This paper assesses the relationship between international capital inflows and economic growth in developing economies. We employ methods of threshold regression to examine whether capital flows have different effects in developing economies with weak institutions as compared to those with good institutional infrastructure.. Our findings show that a threshold effect exists in the capital inflows and growth nexus. More precisely, the results obtained demonstrated that the impact of capital inflows on economic growth is positive and significant once a defined threshold level of institutional quality has been exceeded. At any point below that threshold level, the capital inflows-growth relationship appears to be non- existent. These results support the notion of the capital inflows and growth relationship being contingent on the level of institutional development in an economy. Therefore, providing vital policy implications for policy makers and government in ensuring the improvement of a country’s institutional environment with the purpose of enhancing economic growth through capital flows. |
| Keywords: | Capital inflows, economic growth, institutional quality, threshold regression |
| JEL: | C13 C51 F3 F43 |
| Date: | 2021–03–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107392&r= |
| By: | Saptorshee Kanto Chakraborty (Paris School of Economics); Massimiliano Mazzanti (University of Ferrara; SEEDS, Italy) |
| Abstract: | Renewable electricity is a pillar of the sustainability transition being pursued through climate and energy policy strategies, and the European Green Deal represents a potential investment plan for this new phase of development. Economic growth can be inƒfluenced by the expansion of renewable electricity consumption, but the nature of their relationship is ambiguous and depends on various economic and policy factors. Th‘is paper investigates the long-run relationship between renewable electricity consumption and economic growth in selected countries over the period 1971-2015 using econometric panel data techniques that specifi€cally address cross-country heterogeneity and cross-sectional dependence. Our fi€ndings suggest that, on average, there is a signi€cant positive long-term relationship between renewable electricity consumption and economic growth, although Granger causality is not detected. Regarding causality, we do fi€nd per capita economic growth to be a causal factor for total electricity consumption. |
| Keywords: | Electricity Consumption, Economic Growth, Renewables, Cross-sectional Dependence, CS-ARDL Model, CS-DL Model |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0421&r= |
| By: | Krammer, Sorin; Gören, Erkan |
| Abstract: | Entrepreneurship is a cornerstone of technological innovation and economic development. We posit that the genetic make-up of countries (populations) will affect the extent of their engagement in entrepreneurial activities, in addition to the factors showcased by prior literature (e.g., institutions, culture, socio-economic, demographic, or historical). To test this conjecture we employ a country-level genetic measure that is commonly associated with novelty- and risk- seeking behaviours using the frequency of the 2- and 7-repeat allele variants of the DRD4 exon III gene. Our results confirm a systematic, positive association between genetics and entrepreneurial activities across 97 countries using a large set of controls and battery of robustness tests. These findings reconcile the “nature versus nurture” debate with respect to entrepreneurial activities around the world and provide some valuable insights on the significance of different determinants of entrepreneurship. |
| Keywords: | Entrepreneurship, Genetic Diversity, Novelty-Seeking, DRD4 Exon III |
| JEL: | D02 L26 O31 |
| Date: | 2021–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107309&r= |
| By: | Makoto Yano (Institute of Economic Reserch, Kyoto University and RIETI); Yuichi Furukawa (Aichi University and RIETI) |
| Abstract: | Between the 1760s and 1980s, we have experienced at least three industrial revolutions. We explain such cycles as ergodic chaos and relate it to the average long-run interest rate and intellectual property protection. Because innovation dynamics is intrinsically multi-dimensional, we need newly to develop a structural characterization of multi-dimensional ergodic chaos suitable for an economic analysis. Introducing such a characterization for the two-dimensional case, we show that if the monopolistic use of a new invention lasts eight years, an industrial-revolution-like burst of new technologies recurs about every one hundred years, given empirically reasonable values of the determinants of a long-run interest rate. |
| Keywords: | industrial revolutions, chaotic cycles, intellectual properties, market quality dynamics |
| JEL: | C62 E32 O41 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:kyo:wpaper:1057&r= |