|
on Economic Growth |
| By: | Spyridon Boikos (University of Macedonia); Theodore Panagiotidis (University of Macedonia); Georgios Voucharas (University of Macedonia) |
| Abstract: | Is there any specific structure of the financial system which promotes economic growth or does this structure depend on the level of economic growth itself? Financial development and financial reforms affect economic growth, but less is known on how this effect varies across different levels of the conditional distribution of the growth rates. We examine this by using panel data for 81 countries for more than 30 years. We account for unobserved heterogeneity and operate within alternative econometric approaches. The findings indicate that financial reforms are important determinants of growth, especially when a country faces relatively low levels of economic growth. Financial development does matter for growth, however, the size and significance of the effect vary. Financial reforms affect economic growth more than financial development. We reveal that the components of financial reforms, which are more important for economic growth, are the supervision of banks and the regulation of securities markets. |
| Keywords: | Financial Development, Financial Reforms, Economic Growth, Quantile Regression, Panel Data |
| JEL: | O16 O40 G10 G20 C21 C23 |
| Date: | 2021–12–29 |
| URL: | http://d.repec.org/n?u=RePEc:lie:wpaper:98&r= |
| By: | Matteo Lanzafame (Asian Development Bank) |
| Abstract: | This paper provides estimates of the impact of demographic change on labor productivity growth, relying on annual data over 1961-2018 for a panel f 90 advanced and emerging economies. We find that increases in both the young and old population shares have significantly negative effects on labor productivity growth, working via various channels – including physical and human capital accumulation. Splitting the analysis for advanced and emerging economies shows that population ageing has a greater effect on emerging economies than on advanced economies. Extending the benchmark model to include a proxy for the robotization of production, we find evidence indicating that automation reduces the negative effects unfavorable demographic change – in particular, population aging-on labor productivity. |
| Keywords: | Demographic Change, Labor Productivity, Robots |
| JEL: | C33 J11 O40 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2021.30&r= |
| By: | Stefano Magrini (Department of Economics, University Of Venice CÃ Foscari); Alessandro Spiganti (Department of Economics, University Of Venice CÃ Foscari) |
| Abstract: | We present a two-area endogenous growth model where abstract knowledge flows at no cost across space but tacit knowledge arises from the interaction among researchers and is hampered by distance. Digital communication reduces this "cost of distance" and reinforces productive specialization, leading to an increase in the system-wide growth rate but at the cost of more inequality within and across areas. These results are consistent with evidences on the rise in the concentration of innovative activities, income inequality, and skills and income divergence across US urban areas. |
| Keywords: | Agglomeration, specialization, digital communication, inequality, patents |
| JEL: | J24 O31 O41 R12 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:2021:28&r= |
| By: | Augustin Kwasi Fosu (Institute of Statistical, Social, and Economic Research (ISSER), University of Ghana, Legon, Ghana; College of Business and Economics, University of Johannesburg; Johannesburg, South Africa; Faculty of Economic and Management Sciences, University of Pretoria, Pretoria, South Africa; Centre for the Study of African Economies (CSAE), University of Oxford, Oxford, UK) |
| Abstract: | In the light of the increasing importance of institutions in economic development and Africa's desire to catch up, the present paper provides an account of this crucial subject, `Institutions and African Economic Developmentâ€'. First, adopting the usual definition of `institutions' as `rules of the game', the paper shows that improvements in economic institutions, such as economic freedom, had begun by the early 1990s, and accelerated about the mid-1990s, consistent with observed improvements in economic and development outcomes. Also improved are measures of political institutions: an index of electoral competitiveness, constraint on the executive branch of government, and polity 2 as an indicator of the level of democracy, beginning in the late 1980s or early 1990s. Second, based primarily on a review of the extant literature, the paper observes that these improvements in the measures of economic and political institutions are positively associated with the increasing economic development in Africa. Third, indicators of institutional instability, measured by the frequency of civil wars and the incidence of coups d'etat, have been diminishing since the early 1990s, with implications for improved growth and human development. Fourth, some evidence is provided in support of the notion that African countries with better performance on institutional quality during the period of growth resurgence have also exhibited greater progress on poverty reduction. Finally, the paper concludes by flagging the potential risk of African countries backtracking on their respective trajectories toward achieving the democratic consolidation required to sustain the gains in growth and development. |
| JEL: | O11 O15 O43 O55 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:pre:wpaper:202202&r= |
| By: | Carlos J. Charotti; Nuno Palma; João Pereira dos Santos |
| Abstract: | Spain was one of the world's richest countries and a first-rank European power around 1500. Two centuries later this was no longer the case, and it would become of the poorest countries in Western Europe. In this paper, we study the long-run impact of the influx of silver from the New World since 1500 for the economic development of Spain. Compared with a synthetic counterfactual, the price level in Spain increased by up to 200% more by the mid-seventeenth century. Spain's GDP per capita outperformed other European nations for around a century: by 1600, it was close to 40% higher than in its synthetic counterfactual. However, this effect was reversed in the following 150 years: by 1750, GDP per capita was 40% lower than it would have been if Spain had not been the first-wave receiver of the American treasure. |
| JEL: | N13 O11 O57 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:man:sespap:2201&r= |
| By: | Yasar Ersan (University of Michigan); Ilhan Can Ozen (Department of Economics, Middle East Technical University, Ankara, Turkey) |
| Abstract: | The American Board of Commissioners for Foreign Missions (ABCFM) had a significant foothold in the Anatolian geography for the majority of the early 19th century, through their sizeable human capital intervention. Through an extensive archival work, we study the impact of human capital intervention on development outcomes. Using the spatial variation in the built and functional mission stations, we find areas closer to ABCFM missions have presently higher income by 5%-17%, and higher general development index by 0.07-0.12 standard deviation in 10 km proximity. We identify the mission impact by exploiting a placebo set from the group that was conceived but not carried out, and also an exogenous re-partition of the working region as an instrumental variable strategy. The underlying mechanisms are labor productivity in the agriculture sector, which allows for greater skill differentiation and structural transformation. Gender roles in education are also significantly transformed. |
| Keywords: | Middle East, American missionaries, economic development, human capital, persistence |
| JEL: | I25 L16 N35 N55 O10 O43 Z12 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:met:wpaper:2201&r= |
| By: | Tian Xiong (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Kaan Celebi (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)); Paul J.J. Welfens (Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)) |
| Abstract: | There has been a long-standing debate over the development of savings rates in developed economies, and an emphasis has been placed on ageing societies and a global savings glut. Meanwhile, with rising global temperatures and more frequent extreme weather events becoming an increasingly visible economic and ecological global challenge, the concern of climate-related risks could indeed be an important issue in monetary and real economic analysis. This study aims to investigate the dual long-term challenge of sustainable economic development. By constructing an enhanced growth model and investigating empirically, using a panel approach which employs data from OECD countries between 1980 to 2020, the question as to the extent to which the savings rate is affected by ageing populations and environmental degradation will be addressed in a broad macro perspective. This study explores for the first time the impact of natural disasters on OECD countries and the main findings indicate that ageing populations and natural disasters have significant negative impacts on savings rates. Moreover, the analyses using sub-samples suggest a diminishing role of the real long-term interest rate regarding savings behaviour. |
| Keywords: | savings rate, ageing, natural disaster, economic growth, panel analysis, OECD |
| JEL: | E21 E43 J11 O11 Q54 C33 |
| Date: | 2021–12 |
| URL: | http://d.repec.org/n?u=RePEc:bwu:eiiwdp:disbei309&r= |
| By: | Davoine, Thomas (University of Applied Sciences Western Switzerland and Institute for Advanced Studies (IHS), Vienna, Austria) |
| Abstract: | Higher fertility slowly increases the workers-to-retirees ratio over the long run, which can ease the pension financing challenge brought about by population aging. It may or may not increase production per capita. Existing simulation studies all find a positive impact on public finances over the long run. They however differ on the impact on output per capita. Whether differences are due to model designs or country characteristics is unknown. Using the same macroeconomic model for a sample of 14 European countries, I find that the long-run pension deficits are reduced 27% on average, if one woman out of five had one more child in her lifetime. Variations across countries are small. On the other hand, I find that output per capita increases in all countries from my sample, with one exception. Differences in population structures, age-productivity profiles and pension systems can explain the exception. Fertility-promoting policies will always ease the public finance challenge due to population aging, but may worsen output per capita if pension payments are too loosely connected to earnings histories or if age-productivity profiles are very steep. |
| Keywords: | ertility, population aging, pensions, productivity profiles, computable general equilibrium |
| JEL: | C68 H55 J11 J13 |
| Date: | 2022–02 |
| URL: | http://d.repec.org/n?u=RePEc:ihs:ihswps:38&r= |
| By: | Ignacio Campomanes (NCID, University of Navarra) |
| Abstract: | This paper analyzes how the different mechanisms proposed to explain the inequality-growth relation are affected by the introduction of social mobility in a politico-economic environment with imperfect tax enforcement. I show that the direct negative effect of inequality on growth predicted by models of incomplete markets is especially pronounced in societies with low social mobility, while it is lessened in highly mobile economies. This is due the different effects of the increase in inequality on redistribution in each case. Conversely, in models where inequality favors economic growth because of investment indivisibilities or heterogeneity in marginal propensities to save among the population, the opposite result applies. Inequality is especially beneficial for economic growth when social mobility is low, as the compensating effect of redistribution is reduced. Finally, exogenous taxation costs modulate the previous findings depending on whether redistribution helps or retards economic growth. Conditional correlations of market inequality and economic growth across countries point to an important modulating effect of social mobility. |
| Keywords: | Inequality, Social Mobility, Economic Growth, Taxation |
| JEL: | E24 E62 O43 P16 |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2022-599&r= |
| By: | Aurelien Eyquem (Univ Lyon, Université Lumière Lyon 2, GATE UMR 5824, F-69130 Ecully, France; Institut Universitaire de France.); Masahige Hamano (Faculty of Political Science and Economics, Waseda University, 1-6-1 Nishiwaseda Shinjuku-ku, Tokyo 169-8050, Japan.) |
| Abstract: | A tractable model with heterogeneous households is proposed to analyze the two-way interactions between demographic and macroeconomic variables. Total population and labor market participation are both endogenous and affected by economic as well as demographic factors.In addition, demographic factors have direct effects on aggregate productivity through selection effects on the labor market. We show that aging and negative fertility shocks have opposite predictions in terms of their effects on GDP per capita and aggregate productivity.A quantitative exercise based on Japanese data suggests that an aging shock alone has relatively little effects and falls short in replicating the data, while considering negative fertility shocks fits the data much better. |
| Keywords: | Heterogeneous workers, Aging, Productivity, Labor markets. |
| JEL: | E20 J11 J13 J21 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:wap:wpaper:2121&r= |