the demographic transition and the emergence of sustained economic growth the demographic transition that swept the world in the course of the last century has been identified as one of the prime forces in the transition from stagnation to growth the unprecedented increase in population growth during the early stages of industrialization was ultimately reversed and the demographic transition brought about a significant reduction in fertility rates and population growth in various regions of the world enabling economies to convert a larger share of the fruits of factor accumulation and technological progress into growth of income per capita this paper examines various mechanisms that have been proposed as possible triggers for the demographic transition assessing their empirical validity and their potential role in the transition from stagnation to growth jel o11 o14 o33 o40 j11 j13

heterogeneous market beliefs fundamentals and the sovereign debt crisis in the eurozone type main xml id ecca12155 abs 0001 the unprecedented sovereign debt crisis across the eurozone has prompted a new generation of models with self fulfilling attacks on public debt the model presented in this paper shows that multiple equilibria arise as investors have no direct information and form heterogeneous rational beliefs about the government s sustainable limit of the solvency primary balance if beliefs of insolvency are sufficiently large then the government is bound to default although initial solvency conditions are satisfied several issues are discussed concerning the role of initial conditions fiscal shocks and the policy options to escape from the default domain

the end of cheap chinese labor abstract in recent decades cheap labor has played a central role in the chinese model which has relied on expanded participation in world trade as a main driver of growth at the beginning of chi

would helicopter money be spent new evidence for the netherlands according to some economists central banks should use helicopter money to boost inflation expectations based on a survey among dutch households we examine whether respondents would spend the

the drivers of structural change the main goal of this paper is to provide an integrated survey of the literature devoted to identifying the drivers of structural change broadly defined as the process of reallocation of economic activity across the three broad sectors agriculture manufacturing and services using the ggdc 10 sector database this paper first presents the empirical facts associated with structural change in different regions of the world that is europe and the usa asia latin america and africa then reviews four determinants of structural change i changes in income ii changes in relative sectoral prices iii changes in input output linkages and iv changes in comparative advantage s via globalization and trade

do demographics prevent consumption aggregates from reflecting micro level preferences abstract most simulated micro founded macro models use solely consumer demand aggregates in order to estimate preference parameters of a representative consumer for use in policy evaluation focusing on dynamic models with time separable preferences we show that aggregation holds if and only if momentary utility functions fall in the identical shape harmonic absolute risk aversion ishara utility class identifying which parameters of ishara utility functions are allowed to vary over time given this theoretical result it should be easy to empirically reject the aggregation properties that the macroeconomic representative consumer identification approach requires it suffices to show that permanent incomes guaranteeing the same living standard across households of different size violate an affine relationship in order to test the validity of this affine equation we develop a vignette survey that produces appropriate data without demand estimation restrictions imposed by models surprisingly in six countries this equation is not rejected lending support to using consumer demand aggregates

does demographic change matter for growth abstract how important is the demographic transition for economic growth to answer this question this paper constructs a general equilibrium overlapping generations model with endogenous fertility the model is calibrated to data from taiwan a country that experienced rapid economic growth while undergoing significant demographic transition our results suggest that more than one third of the output growth in taiwan during the past four decades can be attributed to demographic transition while tfp growth explains another third and the remainder is mainly due to skill biased technological progress our results show that demographic change is an important driver of the growth process in countries undergoing rapid fertility decline

trust me i am a european central banker in the aftermath of the financial crisis the ecb has experienced an unprecedented deterioration in the level of trust this raises the question as to what factors determine trust in central banking we use a unique cross country dataset which includes a rich set of socioeconomic characteristics and supplement it with variables meant to reflect a country s macroeconomic condition we find that besides individual socio economic characteristics macroeconomic conditions play a crucial role in the trust building process our results suggest that agents are boundedly rational in the trust building process and that current ecb market operations may even be beneficial for trust in the ecb in the long run

social class and the spirit of capitalism one of the key social transformations that accompanied the british industrial revolution was the economic decline of the aristocracy standard theories of wealth inequality cannot explain why the aristocrats in spite of their superior wealth and education failed to be the main protagonists and beneficiaries of industrialization we discuss recent research based on a model of endogenous preferences that is consistent with the demise of aristocracy jel 010 040

marriage specialization and the gender division of labor we consider why the gender division of labor is so often enforced by custom and why customary gender divisions of labor generally involve both direction and prohibition in our formal model agents first learn skills and then enter the marriage market we show that wasteful behavior may emerge due to strategic incentives in specialization choice and human capital acquisition and that both problems may be mitigated through a customary gender division of labor this division is not pareto improving both the distributional effects and welfare gains of a customary gender division of labor decrease as opportunities for market exchange increase

structural change and the fertility transition this paper provides new insights into the relationship between structural change and the fertility transition we exploit the spread of an agricultural pest in the american south in the 1890s as pl

intergenerational transfers and the fertility income relationship evidence from cross sectional data reveals a negative relationship between family income and fertility this article argues that constraints to intergenerational transfers are crucial for understanding this relationship if parents could legally impose debt obligations on their children to recover the costs incurred in raising them then fertility would be independent of parental income a relationship between fertility and income arises when parents are unable to leave debts because of legal enforcement or moral constraints this relationship is negative when the intergenerational elasticity of substitution is larger than one a case in which parental consumption is a good substitute for children s consumption

the european bond markets under emu in this paper we document how in the wake of monetary unification the markets for euro area sovereign and private sector bonds have become increasingly integrated issuers and investors alike have come to regard the euro area bond market as a single one primary and secondary bond markets have become increasingly integrated on a pan european scale issuance of corporate bonds has taken off on an unprecedented scale in continental europe in the process both investors and issuers have reaped the considerable benefits afforded by greater competition in the underwriting of private bonds and auctioning of public ones and by the greater liquidity of secondary markets bond yields have converged dramatically in the transition to emu the persistence of small and variable yield differentials for sovereign debt under emu indicates that euro area bonds are still not perfect substitutes however to a large extent this does not reflect persistent market segmentation but rather small differentials in fundamental risk liquidity differences play at most a minor role and this role appears to arise partly from their interaction with fundamental risk the challenges still lying ahead are numerous they include the imbalance between the german dominated futures and the underlying cash market the vulnerability of the cash markets prices to free riding and manipulation by large financial institutions the possibility of joint bond issuance by euro area countries the integration of clearing and settlement systems in the euro area bond market and the participation of new accession countries issuers in this market copyright 2004 oxford university press

an intergenerational model of population growth the problem of population growth has been only partially formulated in an intertemporal context therefore a link between population theory and economic growth theory is still missing this paper attempts to provide such a link by analyzing an intergenerational model of optimum population growth the model accommodates the idea that decisions on increases in population should consider the new population s quality of life this concept is elaborated upon in a static framework by gary becker and gregg lewis dennis de tray and robert willis other literature on population growth such as harold votey disregards this consideration altogether 2 more explicitly this paper assumes that the utility of each generation is a function of the level of its consumption and the number and utility of the newly born people we are thus led to consider the utility of an infinite number of generations this model differs from paul samuelson s intergenerational model of pure consumption in which the utility of each generation depends only on that generation s own consumption recently philip neher 1971 analyzed a model of fertility in primitive economies it is based on the assumption that parents use children as investments to insure future consumption needs neher s analysis focuses entirely on the pension motive for having children 3 our model assumes that fertility is determined so as to balance the parents welfare derived from additional children against that derived from the children s quality of life we first outline a general model of optimum population growth in order to discuss explicitly various economic aspects of population we use a simple case in the analysis section i sets up the basic model

structural change and economic growth this paper presents a model in which a country s measured average propensity to save endogenously rises when its economy industrializes the model has agricultural and manufacturing sectors only agriculture uses land if at early dates income per capita is low agricultural consumption is important land is valuable and capital gains on land may constitute most wealth accumulation leaving the country s nipa aps low if exogenous technological progress raises incomes over time engel s law shifts demand to manufactured goods then land s portfolio importance relative to reproducible capital diminishes and the national income and products account saving rate can rise this paper presents a model illustrating that structural change due to the operation of engel s law can systematically affect an economy s measured saving rate according to the model a country s national income and product account average propensity to save will rise naturally if and when technological progress sufficiently lifts its income per capita this suggests a new interpretation of time series evidence while saving rates historically tend to be higher after industrialization than before one cannot automatically infer that changing wealth accumulation behaviour led to modernization rather structural change accompanying growth may have caused the rise in saving rates this paper also warns that international trade could lead to a contrasting pattern in cross sectional data highincome nations might contemporaneously have lower measured saving rates than poor countries recent work by mankiw romer and weil 1992 islam 1995 mankiw 1995 and others investigates long run patterns the analyses assume that each economy has attained or is moving toward a steady state equilibrium as in solow 1956 a country s steady state level of per capita gdp depends on its average propensity to save aps its rate of population growth the efficiency of its production sector etc regression outcomes seem consistent with the solow model s prediction that a higher aps will ceteris paribus lead to a higher level of income per capita the idea is that heterogeneity of exogenous preferences leads to international differences in aps s and in turn to long run differences

the role of transportation in u s economic development 1840 1860 we return to two questions concerning the 19th century u s transportation revolution first to what extent were transportation improvements responsible for the large changes in the regional distribution of population in the united states and within regions for the changes in industry structure second how important were transportation improvements for welfare gains we find that transport improvements were the key factor driving where people lived and what industry they worked in we also find that transport improvements were important for welfare gains gains over 1840 1860 would have been only half as large if there had been no transportation improvements

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

structural change and the kaldor facts in a growth model with relative price effects and non gorman preferences u s data reveal three facts 1 the share of goods in total expenditure declines at a constant rate over time 2 the price of goods relative to services declines at a constant rate over time and 3 poor households spend a larger fraction of their budget on goods than do rich households i provide a macroeconomic model with non gorman preferences that rationalizes these facts along with the aggregate kaldor facts the model is parsimonious and admits an analytical solution its functional form allows a decomposition of u s structural change into an income and substitution effect estimates from micro data show each of these effects to be of roughly equal importance

the cross sectional price equation reply derosa and goldstein hereafter d g argue that the appropriate test for a pricing asymmetry should regard only the sign of a05 the estimated coefficient of the cost change dummy variable v1 and the sign and magnitude of a7 the estimated coefficient on the interaction term between the cost change dummy variable and the change in variable cost v1 x avc in their words since a0 the intercept term in equation 2 is the estimated time trend of prices and cannot be uniquely identified with the asymmetry hypothesis under investigation it should not be used as evidence of an asymmetry p 880 fn 6 we would argue instead that the magnitude of the intercept term in the price equation lies at the heart of the asymmetry issue the intercept term is the empirical manifestation of inflationary inertia reflecting the expectations of price and wage setters george perry has called this phenomenon the inflationary norm as discussed below the estimated intercept terms in both crosssectional and time series price equation studies have been positive and of relatively large magnitude especially in the 1970 s d g s estimated intercept terms are 1 20 and 2 09 for the 1972 76 period the alternative configurations of a0 the intercept term and a5 the coefficient on the cost change dummy variable are shown in figure 1 in panel a a0 a 5 0 and there is no asymmetry in panels b c and d the basic asymmetry result holds namely that a given percentage increase in variable cost produces a larger price increase than the decrease in price produced by a cost decrease of the same magnitude only in panel e does the asymmetry work in the opposite direction generalizing given a positive value of a0 the basic pricing asymmetry result holds for all positive values of a5 and for negative values of a5 provided that j a5j 2ao only when i a5 i 2ao a5 0 does the asymmetry work in the opposite direction this latter condition is met neither in our results nor in those reported by d g our point of agreement with d g is in their argument that the negative sign on a5 the coefficient on the cost change dummy variable is not by itself the appropriate test for the asymmetry we disagree with them however in the degree of importance to be attached to the intercept term

trust in large organizations several authors suggest that trust is an important determinant of cooperation between strangers in a society and therefore of performance of social institutions we argue that trust should be particularly important for the performance of large organizations in a cross section of countries evidence on government performance participation in civic and professional societies importance of large firms and the performance of social institutions more generally supports this hypothesis moreover trust is lower in countries with dominant hierarchical religions which may have deterred networks of cooperation trust hold up remarkably well on a cross section of countries this abstract was borrowed from another version of this item

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

beyond balanced growth balanced growth models are commonly used in macroeconomics because they are consistent with the well known kaldor facts regarding economic growth these models however are inconsistent with one of the most striking regularities of the growth process the massive reallocation of labour from agriculture into manufacturing and services this paper presents a simple model consistent with both the kaldor facts and the dynamics of sectoral labour reallocation

changes in sectoral composition associated with economic growth in this paper the author uses dynamic general equilibrium methods to examine the interrelationship between sectoral composition and growth she shows that growth is affected by sectoral composition and vice versa the model is basically a solow model of sustained growth with multiple consumption goods and nonhomothetic preferences each consumption good is produced using different factor intensities the rate of exogenous technological change is different in each sector nonhomotheticity of preferences drives the result that sectoral composition affects growth rates copyright 1997 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

taxation and labor supply of married couples across countries a macroeconomic analysis we document contemporaneous dierences in the aggregate labor supply of married couples across 18 oecd countries relative to their us counterparts european married men work on average 9 to 17 percent and married women in western and southern europe 26 and 31 percent fewer hours married women in scandinavia and eastern europe however work almost as many hours as us married women we nd that a model of joint household decision making can largely replicate these facts if the full non linearity of labor income taxes and the tax treatment of married couples are taken into account going to a system of strictly separate taxation would increase labor supply of married women by more than 100 hours annually in a third of our sample countries

the u s demographic transition between 1800 and 1940 the u s went through a dramatic demographic transition in 1800 the average woman had 7 children and 94 percent of the population lived in rural areas by 1940 the average woman birthed just 2 kids and only 43 percent of populace lived in the country the question is what accounted for this shift in the demographic landscape the answer given here is that technological progress in agriculture and manufacturing explains these facts

population technology and growth from malthusian stagnation to the demographic transition and beyond this paper develops a unied growth model that captures the historical evolution of population technology and output it encompasses theendogenous transitionbetween three regimes that have characterized economic development the economy evolves from amalthusianregime wheretechnologicalprogressis slow andpopulationgrowthprevents anysustainedriseinincomepercapita intoapost malthusianregime wheretechnological progress rises and population growth absorbs only part of output growth ultimately a demographic transition reverses the positive relationship between income and population growth andtheeconomyentersamoderngrowthregimewithreducedpopulationgrowth

the u s westward expansion the u s economic development in the 19th century was characterized by the westward movement of population and the accumulation of productive land in the west this article presents a model of migration and land improvement to identify the quantitatively important forces driving these phenomena the conclusion is that the decrease in transportation costs induced the westward migration whereas population growth was responsible for the investment in productive land

individual s religiosity enhances trust latin american evidence for the puzzle this paper explores the effect of religious observance and affiliation to the dominant religion catholicism on trust in institutions towards others and market attitudes the analysis is performed using a latin american database of twenty thousand respondents from 2004 by means of ordered probit models the most interesting results are i trust toward others is positively correlated with religious observance and with catholic affiliation ii there is a positive correlation between

child mortality child labour and economic development the paper presents a model where the interplay between fertility child labour and education can explain economic stagnation when parents live in an environment of high child mortality if in contrast child mortality is low the solution of the parental decision problem leads to perpetual economic growth the two long run states are connected by a path of demographic transition and economic take off along which the incidence of child labour disappears the paper also discusses alternative policies to escape from the low income equilibrium

tranching in the syndicated loan market around the world loan tranching allows banks to manage risk and facilitate firm financing which may be essential for firms that cannot access investors from stock markets we analyze the determinants and benefits of loan tranching by pooling the tranches of individual loans to create the largest cross country sample of syndicated loans covering more than 150 000 loans from multinational and domestic firms we find that in addition to market deal and borrower characteristics legal and institutional differences impact loan tranching strong creditor protection and efficient debt collection increase the probability of tranching and reduce tranche spreads ultimately promoting firms access to debt we also find evidence that tranching facilitates the financing of multinational firms abroad due to the transfer of legal and cultural institutions to foreign subsidiaries overall our results suggest that tranching plays an important role in reducing a country s financial development gap and promotes firms access to debt

complements versus substitutes and trends in fertility choice in dynastic models demographers emphasize decreased mortality and economic development as the main contributors generating the demographic transition contrary to previous findings we show that simple dynastic models a la barro becker can reproduce observed changes in fertility in response to decreased mortality and increased productivity growth if the intertemporal elasticity of substitution is low enough we show that this is largely due to number and welfare of children being substitutes in the utility of parents in this case we find that with an ies of one third model predictions of changes in fertility amount to two thirds of those observed in u s data since 1800 between 1800 and 2000 fertility choice in the united states underwent a dramatic transition depending on estimates it fell from about six children per woman to around two children per woman this demographic transition from a state of high fertility and high mortality to low fertility and low mortality has been documented by demographers and historians in the united states and in every other developed country in the world over this same period natural rates of population growth net of immigration also fell but less substantially demographers have not reached a consensus on the root causes of this transformation but list several changes as likely main contributors these include reductions in infant and child mortality rates imrs and cmrs and the process of industrialization and economic development the work in demography and history on this topic has largely been limited to empirical studies with almost no choice based modeling of the type seen in economics even there issues of the timing of changes