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on Economic Growth |
| By: | Teodora Borota Milicevic; Fabrice Defever; Giammario Impullitti; Adam Hal Spencer |
| Abstract: | We build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The model is calibrated to two blocks of the EU: the old and new members. R&D subsidy coordination is motivated by the distortion from subsidy competition, the strategic motive, and by intertemporal knowledge spillovers, which drive growth. The ideas production function features decreasing returns, making growth semi-endogenous, where policy affects growth temporarily. We compute gains from harmonised subsidies, chosen in each region to maximise EU welfare, with respect to competitive and observed subsidies. First, we find substantial gains to coordination, which derive exclusively from the strategic motive. Second, extending to include endogenous idea flows via FDI gives knowledge spillovers as the main driver of coordination gains. Third, extending to fully endogenous growth gives similar results. Fourth, conclusions based on steady state analysis have misleading optimal subsidies and overstate the estimated gains. |
| Keywords: | Optimal innovation policy, growth theory, international policy coordination, EU integration, FDI spillovers. |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:2022/03&r= |
| By: | Feir, Donn. L. (University of Victoria); Gillezeau, Rob (University of Victoria); Jones, Maggie E. C. (University of Victoria) |
| Abstract: | In the late nineteenth century, the North American bison was brought to the brink of extinction in just over a decade. We demonstrate that the loss of the bison had immediate, negative consequences for the Native Americans who relied on them and ultimately resulted in a permanent reversal of fortunes. Once amongst the tallest people in the world, the generations of bison-reliant people born after the slaughter lost their entire height advantage. By the early twentieth century, child mortality was 16 percentage points higher and the probability of reporting an occupation 29.7 percentage points lower in bison nations compared to nations that were never reliant on the bison. Throughout the latter half of the twentieth century and into the present, income per capita has remained 28% lower, on average, for bison nations. This persistent gap cannot be explained by differences in agricultural productivity, self-governance, or application of the Dawes Act. We provide evidence that this historical shock altered the dynamic path of development for formerly bison-reliant nations. We demonstrate that limited access to credit constrained the ability of bison nations to adjust through respecialization and migration. |
| Keywords: | North American Bison, Buffalo, extinction, economic history, Native Americans, indigenous, income shock, intergenerational mobility |
| JEL: | I15 J15 N31 N32 O10 |
| Date: | 2022–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp15498&r= |