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on Economic Growth |
| By: | Rodolphe Desbordes; Markus Eberhardt |
| Abstract: | The damage function used to assess the economic impact of secular changes in temperature is one of the most speculative components of integrated assessment models of climate change. Existing work informing this debate is based on pooled empirical models incorporating limited non-linearity and giving little regard to dynamics. We use aggregate and agricultural data for 151 countries over the past six decades to estimate dynamic heterogeneous models which (a) allow the weather-output nexus to differ freely across countries, (b) help distinguish short-run from long-run effects, and (c) account for unobserved time-varying heterogeneity. Overall, we find that, in low-income or high-temperature countries, a permanent 1?C rise in temperature is associated with a fall in income per capita of about 1.3% in the short-run and 8.5% in the long run. These long-run effects are substantially larger than those commonly suggested in the literature. |
| Keywords: | temperature, weather, climate change, economic development, economic growth |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:2024-01&r=gro |
| By: | Klaus Gründler; Andreas Link |
| Abstract: | Inequality between ethnic groups has been shown to be negatively related to GDP, but research on its effect on contemporary economic growth is limited by the availability of comparable data. We compile a novel and comprehensive dataset of harmonized Gini indices on ethnic inequality for countries and sub-national units between 1992 and 2013. Our approach exploits differentials in nighttime lights (NTL) across ethnic homelands, using new techniques to harmonize NTL series across geographic regions and years to address concerns about spatial and temporal incomparability of satellite photographs. Our new data shows that ethnic inequality is widespread across countries but has decreased over time. Exploiting the artificiality of sub-national borders in an instrumental variable setting, we provide evidence that income inequality across ethnic groups reduces contemporary economic growth. The negative effect of ethnic inequality is caused by increasing conflict and decreasing public goods provision. |
| Keywords: | ethnic inequality, economic development, regional data, nighttime lights, satellite photographs, calibration, ethnic groups, conflict, public goods provision |
| JEL: | O10 O15 O43 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11034&r=gro |
| By: | Steenbrink, Rachel; Skali, Ahmed |
| Abstract: | Although it is often argued that wealth inequality matters more for economic growth than income inequality, this relationship has rarely been studied empirically, with a few exceptions covering a very restricted country sample or short timeframe. Leveraging hitherto unexploited wealth inequality data from the World Inequality Database, covering a panel of 165 countries between 1995 and 2019, we document a negative and statistically significant relationship between wealth concentration at the top of the distribution and economic growth. A one standard deviation increase in wealth inequality within countries is associated with a 0.4 percentage points (17%) decline in growth rates. Instrumental variables support a causal interpretation of the results. The results survive a large battery of robustness checks, and we find little evidence to suggest a heterogeneous relationship. |
| Keywords: | Wealth Inequality, Economic Growth, Economic Development |
| JEL: | D31 D63 O10 O47 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:1417&r=gro |
| By: | Takehiro Ito (Tohoku Gakuin University); Kazumitsu Sako (Hiroshima Shudo University); Yurika Shiozu (Kyoto Sangyo University); Masatoshi Jinno (Nanzan University); Masaya Yasuoka (Kwansei Gakuin University) |
| Abstract: | This paper sets up an endogenous fertility model with human capital accumulation and uses simulation analysis to evaluate how four child-care support policies ((i) child allowances, (ii) policies to subsidize childcare services, (iii) childcare leave benefits, and (iv) education subsidy policies) affect the fertility rate and the amount of human capital accumulation. This paper presents consideration of the fertility function of a constant elasticity of substitution (CES) function for child-care time and child-care services. The analysis results show that policies (i)-(iii) increase fertility in the short term, but in the long term, households' disposable income declines because of lower human capital accumulation, leading to a lower fertility rate. A policy of subsidy for education investment can raise fertility in the long run by virtue of an increase in human capital accumulation. |
| Keywords: | Child Allowance, Child-Care Service, Child-Care Time, Education Investment, Endogenous Fertility |
| JEL: | J13 H20 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:kgu:wpaper:268&r=gro |
| By: | Thomas Steger; Timo Trimborn |
| Abstract: | To gain insights into the mechanisms that shape the interaction between economic growth and climate change, we analyze the simplified DICE through the lens of growth theory. We analytically show that this model exhibits a continuum of saddle-point stable steady states, a property that carries over to a large set of (analytical and numerical) IAMs. This novel insight is important because it implies initial conditions of stock variables, notoriously difficult to calibrate, matter for the ultimate steady state, i.e. for the long-run economic and climate outcomes. However, we also show that a lack of information about the stock of global capital is considerably less consequential than a lack of information about GHG in the atmosphere. These properties have important implications for understanding the consequences of delayed climate policy implementation and the optimal carbon tax. We employ numerical techniques to show how a postponement of optimal climate policy implementation leads to a higher long-run temperature. We also show that the SCC-to-GDP ratio is in fact largely constant, despite transitional dynamics. However, its level depends strongly on the point in time the policy is implemented. Finally, we employ the setup to better understand the consequences of stronger TFP growth for the climate. |
| Keywords: | economic growth, climate change, IAM, DICE, continuum of steady states, delayed climate policy, TFP growth, peak temperature |
| JEL: | E10 H40 O44 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11053&r=gro |
| By: | Heyen, Nils B.; Zenker, Andrea; Aichinger, Heike; Bratan, Tanja; Kaufmann, Tanja; Schnabl, Esther |
| Abstract: | For more than a decade, advocates of both green growth and degrowth have argued about the role of economic growth for the transformation towards a societal system that ensures social well-being on a global scale without transgressing planetary boundaries. Given that such a transformation needs innovations of various kinds, this article explores the question of how dependent innovation is on economic growth and what effects a potential long-term economic stagnation or decline may have on innovation processes and systems. We approach the subject from different angles using mixed methods. First, we present a quantitative analysis of the linkages between economic growth and innovation activities on a sectoral level, based on data of the Community Innovation Survey (CIS) for Germany. Here, we find two sectors (petroleum and advertising industries) showing negative growth rates but still a higher than average share of innovative enterprises. Subsequently, we present an in-depth qualitative case study of the international pharmaceutical sector, which allows us to include a qualitative evaluation dimension. Here, we investigate different innovation approaches and find that both the amount of capital needed to finance research and development activities and the added health benefit of novel drugs vary greatly. We finally conclude that economic growth is not a necessary condition for all kinds of innovation and reflect on some implications for innovation policy. If in a post-growth era financial resources are limited, a shift to less capital-intensive types of innovation and a concentration on innovations which address prioritised societal or ecological needs seem feasible. |
| Keywords: | (in)dependency, innovation, economic growth |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fisidp:289610&r=gro |