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on Economic Growth |
| By: | Broadberry, Stephen (Nuffield College Oxford); Zhai, Runzhuo (Renmin University) |
| Abstract: | Recent developments in historical national accounting suggest that the timing of the Great Divergence hinges on the different trends in northwest Europe and the Yangzi Delta region of China. The positive trend of GDP per capita in northwest Europe after 1700 was a continuation of a process that began in the fourteenth century, while the negative trend in the Yangzi Delta continued a pattern of alternating periods of growing and shrinking, but reaching a new lower level. These GDP per capita trends were driven by different paths of innovation. TFP growth was strongly positive in Britain after the Black Death, in the Netherlands during the sixteenth century and again in Britain from the mid-seventeenth century. Although TFP growth was positive in China during the Northern Song dynasty, it was predominantly negative during the Ming and Qing dynasties, in the Yangzi Delta as well as in China as a whole. |
| Keywords: | Great Divergence; technology; growth accounting JEL Classification: N10, N30, N35, O10, O57 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:771 |
| By: | Ngoc-Sang Pham; Alexis Akira Toda |
| Abstract: | Tirole (1985) studied an overlapping generations model with capital accumulation and showed that the emergence of asset bubbles solves the capital over-accumulation problem. His Proposition 1(c) claims that if the dividend growth rate is above the bubbleless interest rate (the steady-state interest rate in the Diamond economy without bubbles) but below the population growth rate, then bubbles are necessary in the sense that there exists no bubbleless equilibrium but there exists a unique bubbly equilibrium. We provide a counterexample to this claim based on an analytical example but prove the claim under the additional assumptions that initial capital is sufficiently large and dividends are sufficiently small. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.12477 |
| By: | Tianyu Fan |
| Abstract: | This paper establishes geopolitical relations as a first-order determinant of economic growth. We construct a novel event-based measure of bilateral geopolitical alignment by employing large language models with web search capabilities to analyze over 440, 000 political events across 196 countries from 1960--2019. This comprehensive measure enables us to identify the precise timing and magnitude of geopolitical shifts within countries over time. Using local projections with country fixed effects, we find that a one-standard-deviation improvement in geopolitical relations increases GDP per capita by 9.6 log points over 25 years. These persistent effects operate through multiple reinforcing channels -- enhanced political stability, increased investment, expanded trade, and productivity gains. Across our sample, geopolitical factors generate GDP variations ranging from -35% to +30%, with developing nations facing particularly severe penalties from international isolation. Our findings reveal how geopolitical alignment shapes economic prosperity in an increasingly fragmented global economy. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.04833 |
| By: | Sebastian Galiani; Raul A. Sosa |
| Abstract: | Fertility rates have fallen below replacement in most countries, fueling predictions of demographic collapse and even human extinction. These forecasts overlook a crucial fact: societies are not homogeneous. Using the Bisin–Verdier model of cultural transmission with endogenous fertility and direct socialization, calibrated to U.S. and global religion data, we identify an evolutionary counterforce. Subpopulations with persistently high fertility survive, expand their share, and push the total fertility rate (TFR) upward over time. Even if every country’s TFR reaches a below-replacement level, the persistence of above-replacement groups makes extinction unlikely. Our simulations point to a future of growth with pronounced compositional change—driven above all by high-fertility religious communities—rather than collapse. In particular, in our baseline ten-generation world calibration, Muslims become the largest tradition by share. |
| JEL: | J10 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34157 |
| By: | Naveen Srinivasan (Madras School of Economics, Chennai, Tamil Nadu, India, 600025); Poorna Narayanan (Madras School of Economics, Chennai, Tamil Nadu, India, 600025); Megana Prabha (London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, United Kingdom); Hariharasudhan Selvaraj ((corresponding author) Madras School of Economics, Chennai, Tamil Nadu, India, 600025) |
| Abstract: | We introduce credit constraints into a standard model of endogenous growth. In the presence of credit constraints, firms in poor countries face higher borrowing costs which in turn negatively affects capital accumulation and labor productivity in the final-goods producing sector. Furthermore, lower capital intensity of production makes R&D activity less profitable. As a result, both demand for skilled labor and return to skill are lower in poor countries. Domestic financial frictions may therefore be the key to understanding the persistent wage differentials in favor of rich countries and international migration patterns we observe. |
| Keywords: | Skilled Wages; Migration; Credit Constraints; R&D; Endogenous Growth |
| JEL: | F2 D24 D42 J23 J24 J62 O40 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:mad:wpaper:2025-289 |
| By: | Minford, Patrick (Cardiff Business School); Zhu, Zheyi (Cardiff Metropolitian University) |
| Abstract: | This paper builds on Yang et al (2021) which analysed the e¤ect of wealth inequality on UK economic growth in recent decades with a heterogeneous-agent growth model where agents can enhance individual productivity growth by undertaking entrepreneurship. In this supplementary note we examine whether ease of planning and infrastructure spending also contribute to productivity growth, as argued by some policymakers. The model is estimated and tested by indirect inference. The original model was not rejected in its match to the data behavioutr. We find the enhanced model contributes no improvement of the match. The model with only planning and infrastructure is strongly rejected. |
| Keywords: | Heterogeneous-agent Model, Entrepreneurship, Growth, Inequality, Indirect Inference, planning, infrastructure |
| JEL: | E10 O30 O40 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:cdf:wpaper:2025/13 |