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on Economic Growth |
| By: | Gregory Casey; Ryo Horii |
| Abstract: | We prove a generalized, multi-factor version of the Uzawa steady-state growth theorem. The theorem implies that neoclassical growth models need at least three factors of production to be consistent with empirical evidence on both the capital-labor elasticity of substitution and the existence of capital-augmenting technical change. We also build and calibrate a three-factor endogenous growth model with directed technical change and show that it converges to a balanced growth path that is consistent with the empirical evidence. Our results indicate that natural resources including land and directed technical change play a central role in explaining balanced growth. |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:1157&r= |
| By: | Yuan, Song; Xie, Jian |
| Abstract: | What determines the prevalence of family firms? In this project, we investigate the role of historical family culture in the spatial distribution of family firms. Using detailed firm-level data from China, we find that there is a larger share of family firms in regions with a stronger historical family culture, as measured by genealogy density. The results are further confirmed by an instrumental variable approach and the nearest neighbor matching method. Examining the mechanisms, we find that entrepreneurs in regions with a stronger historical family culture: i) tend to have family members engage more in firms; ii) are more likely to raise initial capital from family members; iii) are more willing to pass on the firms to their children. Historical family culture predicts better firm performance due to a lower leverage ratio. |
| Keywords: | Family Culture; Family Firms; Genealogy; Cultural Origins; Firm Performance |
| JEL: | D02 D2 G3 L2 M1 Z1 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111315&r= |
| By: | Ernest Liu; Song Ma |
| Abstract: | We study the optimal allocation of R&D resources in an endogenous growth model with an innovation network, through which one sector’s past innovations may benefit other sectors’ future innovations. First, we provide closed-form sufficient statistics for the optimal path of R&D resource allocation, and we show that planners valuing long-term growth should allocate more R&D toward key sectors that are upstream in the innovation network. Second, we extend to an open-economy setting and illustrate an incentive for countries to free-ride on fundamental technologies: an economy more reliant on foreign knowledge spillovers has less incentive to direct resources toward innovation-upstream sectors, leading to cross-country differences in unilaterally optimal R&D allocations across sectors. Third, we build the global innovation network based on over 30 million global patents and establish its empirical importance for knowledge spillovers. Fourth, we apply the model to evaluate R&D allocations across countries and time. Adopting optimal R&D allocations can generate substantial welfare improvements across the globe. For the United States, R&D misallocation accounts for about 0.68 percentage points of missing annual growth since the 2000s. |
| JEL: | F43 O33 O38 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29607&r= |
| By: | Lorentz, André (Université de Strasbourg, BETA, Université de Lorraine, CNRS); Ciarli, Tommaso (UNU-MERIT, Maastricht University, and SPRU, University of Sussex); Savona, Maria (SPRU, University of Sussex); Valente, Marco (University of L’Aquila) |
| Abstract: | We derive the Kaldorian cumulative causation mechanism as an emergent property of the dynamics generated by a micro-founded model. We build on an evolutionary growth model which formalises the endogenous relations between structural changes in the production, organisation and functional composition of employment and of consumption patterns (originally proposed by Ciarli et al, 2010). We discuss the main transition dynamics to a self- sustained growth regime in a two-stage growth pattern generated through the numerical simulations of the model. We then show that these mechanisms lead to the emergence of a Kaldor-Verdoorn law. Finally we show that the structure of demand shapes the type of growth regime emerging from the endogenous structural changes, fostering or hampering the emergence of the Kaldor Verdoorn law. This depends on the endogenous income distribution and heterogeneity in consumption behaviour |
| Keywords: | Structural change, economic growth, final consumption, technological change, cumulative causation, evolutionary economics, Kaldor-Verdoorn Law |
| JEL: | O14 O33 O41 L16 C63 E11 |
| Date: | 2022–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2022001&r= |
| By: | Simon Accorsi |
| Abstract: | This article analyzes and deals with the so-called "identification problem" in macroeconomics to study the causal relationships between the type of political regime and the path of medium and long-term economic growth with a time series approach. Taking as a starting point the estimation of an Autoregressive Vector (VAR), the identification problem is presented, and then the solution strategies used in the macroeconomic literature to trace and estimate the consequences of democratic shocks on per capita GDP growth are explained. The article presents novel empirical evidence for the neo-institutionalist literature, exploiting long-term series of the Polity index and GDP per capita. Thus, it is possible to estimate the effects of democratic improvements on economic growth. For the 13 countries analyzed, the results are diverse, so the statement that "democracy does causes growth" must be qualified and put into each country-specific historical context. |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp526&r= |
| By: | Claude Diebolt; Magali Jaoul-Grammare; Faustine Perrin |
| Abstract: | The objective of this article is to study the links between the financing of primary education, schooling and economic growth in France in the nineteenth century. To do so, we use information on the financing allocated by the state, the departments, the municipalities, and households over the period 1820–1913. Our analysis is in two stages. First, we analyse the evolution of these different types of financing over time, relying on the outliers’ methodology to detect the existence of possible breaks in the series. Next, we study the causal relationships between the different types of financing, the number of children enrolled in primary education and the gross domestic product. Over the period studied, our results confirm that mass schooling is first driven by political will, after which it can be funded by increasing wealth in the economy. |
| Keywords: | Primary education; Financing; Nineteenth century; France. |
| JEL: | H52 I24 N33 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2022-02&r= |
| By: | Markus Brueckner; Haiyan Lin |
| Abstract: | We provide estimates of the effects that income inequality has on economic growth in China. Our empirical analysis is at the county level. Using data provided by the China Health and Nutrition Survey, we construct measures of inequality and the growth rates of household incomes per capita for 72 Chinese counties during the period 1989-2015. System-GMM estimates of panel models show that the within-county effect of inequality on economic growth is significantly decreasing in initial average income. For the relatively low levels of initial average incomes that were prevalent in China during the 1980s and 1990s, our model estimates imply that the increase in inequality that occurred in China during the 1980s and 1990s had a significant positive effect on economic growth. However, for current levels of average income, our panel model predicts that inequality has a negative effect on economic growth: a 1 percentage point increase in the Gini would reduce the per annum growth rate by around 1 percentage point. |
| Keywords: | Inequality, Growth |
| JEL: | E0 O4 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:acb:cbeeco:2021-682&r= |
| By: | Gomes, Luiz |
| Abstract: | Considered one of the leading economists of the 20th century, Nicholas Kaldor contributed to the development of modern economic thought in several fields, from cobweb models to tax issues. Kaldor is recognized worldwide for his work on economic development, the theory of distribution and economic growth. Nicholas Kaldor's concerns were directed at practical problems in economic policy. This work aimed to briefly investigate the contributions of Nicholas Kaldor to economic science. In this paper, we succinctly reviewed Nicholas Kaldor's main works. As Nicholas Kaldor's bibliographic production was quite extensive, some parts had to be highlighted, especially the growth models of theoretical framework I, with full employment, and the economic models of theoretical framework II, without full employment. The article is divided into sections and it has a conclusion. |
| Keywords: | Nicholas Kaldor, Economics, Economic Growth, Theory of Distribution. |
| JEL: | B20 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:111352&r= |
| By: | Amin, S.; Murshed, S.M. |
| Abstract: | This paper investigates the relationship between ethnic and religious diversity and financial development by using the data for 102 developing countries. It is widely accepted that financial depth, and the more ready availability of finance, has a central role to play in fostering economic growth. We hypothesize that financial development in developing countries, especially those at the early stages of economic development, may be retarded by pre-existing ethnic and religious diversity, which may produce conflict. However, we believe that this risk can be moderated by sound institutional functioning – including good governance and democracy. Financial depth is measured by M2 and private credit (as a percentage of GDP); the Alesina fragmentation index is used for measuring ethnic and religious diversity, varieties of democracy (VDEM) and the quality of governance datasets. Our results are supportive of our hypothesis that ethnic and religious diversity can indeed hamper financial development; these risks, however, are mitigated by well-functioning institutional arrangements |
| Keywords: | Ethnic diversity, religious diversity, financial development |
| JEL: | Z10 Z13 G0 |
| Date: | 2022–01–10 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:137094&r= |
| By: | Manuel David Cruz |
| Abstract: | This study empirically investigates the relationship between labor productivity (LP), average real wage (RW), and employment (EMP). The paper's main goal is to provide a test of competing theories of growth and income distribution. Standard theory predicts that real wages should increase following increases in labor productivity. Alternative theories and efficiency wage theories suggest that it is the distribution that causes changes in labor productivity. Theory delivers ambiguous predictions regarding the ultimate effects on employment, which can be either negative if factor substitution prevails or positive if higher wages and higher output per worker generate additional aggregate demand and, therefore, employment. I study a panel of 25 OECD economies over 1960-2019, using several approaches: 1) ECM, DOLS, FMOLS, and ARDL regressions with exogenous and endogenous variables, and 2) a VECM exercise as a robustness check. First, there is a long-run relationship between these variables when LP and RW are considered dependent variables. Second, EMP cannot be explained statistically by LP and RW in the long run: it is weakly exogenous, implying that OECD economies as a group have been, on average labor-constrained in the last six decades. Third, I find a positive two-way causality between LP and RW in both the long and short run, supporting the induced technical change, efficiency wages, and bargaining theories over the neoclassical theory. Fourth, concerning the LP-EMP nexus, in the long run, the results show a negative association, statistically significant for the single-equation estimates from EMP to LP in most specifications. Fifth, there is a positive effect running from EMP to RW in most specifications, statistically significant only in the single-equation. Sixth, both LP positively affects EMP, and RW negatively impacts EMP in the short run. |
| Keywords: | Labor productivity, real wages, employment, OECD |
| JEL: | E12 E24 O47 O50 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2203&r= |
| By: | Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | This paper surveys theoretical and empirical literature on non-pecuniary flow of knowledge and the conditions and limitations for firms to benefit from positive externalities. Spillovers from the pool of accumulated knowledge generated by technological and scientific development is considered to be a key factor for economic development in modern growth models. Knowledge spillovers has also been a major topic of empirical research on firms’ innovation and economic performance over the last thirty years or more. By exploiting theoretical and methodological advances, and using more comprehensive, complex and detailed data sources, scholars from various scientific disciplines have improved the identification of factors, mechanisms, and channels that influence flows of knowledge within and across industries, technological regimes and regions. This research has deepened the understanding of the economic importance of knowledge spillovers. |
| Keywords: | externalities; innovation; knowledge spillovers; productivity; technology |
| JEL: | L20 M13 O31 O33 O40 |
| Date: | 2022–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0489&r= |
| By: | Leonor Modesto (UCP, Catolica Lisbon School of Business and Economics); Carine Nourry (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Thomas Seegmuller (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université); Alain Venditti (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université, École des hautes études commerciales du Nord (EDHEC)) |
| Abstract: | The relationship between public debt, growth and volatility is investigated in a Barro-type (1990) endogenous growth model, with three main features: we consider a small open economy, international borrowing is constrained and households have taste for domestic public debt. Therefore, capital, public debt and the international asset are not perfect substitutes and the economy is characterized by an investment multiplier. Whatever the level of the debt-output ratio, the existing BGP features expectation-driven fluctuations. If the debt-output ratio is low enough, there is also a second BGP with a lower growth rate. Hence, a lower debt does not stabilize the economy with credit market imperfections. However, a high enough taste for domestic public debt may rule out the BGP with lower growth. This means that if the share of public debt held by domestic households is high enough, global indeterminacy does not occur. |
| Keywords: | Small open economy,Public debt,Credit constraint,Indeterminacy |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03262961&r= |
| By: | Stuetzer, Michael (Technische Universität Ilmenau); Brodeur, Abel (University of Ottawa); Obschonka, Martin (Queensland University of Technology); Audretsch, David (Indiana University); Rentfrow, Peter J. (University of Cambridge); Potter, Jeff (Atof Inc., Cambridge); Gosling, Samuel D. (University of Texas at Austin) |
| Abstract: | We study the origins of entrepreneurship (culture) in the United States. For the analysis we make use of a quasi-natural experiment – the gold rush in the second part of the 19th century. We argue that the presence of gold attracted individuals with entrepreneurial personality traits. Due to a genetic founder effect and the formation of an entrepreneurship culture, we expect gold rush counties to have higher entrepreneurship rates. The analysis shows that gold rush counties indeed have higher entrepreneurship rates from 1910, when records began, until the present as well as a higher prevalence of entrepreneurial traits in the populace. |
| Keywords: | gold rush, entrepreneurship, culture |
| JEL: | L26 R12 N5 N9 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14894&r= |
| By: | Tom\'a\v{s} Evan; Vladim\'ir Hol\'y |
| Abstract: | Hofstede's six cultural dimensions make it possible to measure the culture of countries but are criticized for assuming the homogeneity of each country. In this paper, we propose two measures based on Hofstede's cultural dimensions which take into account the heterogeneous structure of citizens with respect to their countries of origin. Using these improved measures, we study the influence of heterogeneous culture and cultural diversity on the quality of institutions measured by the six worldwide governance indicators. We use a linear regression model allowing for dependence in spatial and temporal dimensions as well as high correlation between the governance indicators. Our results show that the effect of cultural diversity improves some of the governance indicators while worsening others depending on the individual Hofstede cultural dimension. |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2112.11563&r= |