productive energy use and economic growth energy physical and human capital relationships abstract ecological and biophysical economists and historians of economics consider that availability of energy inputs has played a key role in driving economic growth in industrialized and emerging economies nevertheless being very sensitive to structural characteristics or stages of economic development the strength of this link differs among countries this study analyzes the role of energy in economic growth from a geographical standpoint by estimating an aggregate translog production function with human and physical capital and productive energy use as production factors within a growth framework panel data of 38 major countries for the period from 1995 to 2007 were used the strength of the link between energy and growth is analyzed for the whole sample and the following relevant country groups oecd bric nafta east asian east european and eu15 countries obtained results show that the calculated productivity elasticities with respect to energy use are positive for all country groups bric countries have higher elasticities around 0 37 and eu15 countries have lower elasticities around 0 12 weak substitutability relationships between energy and capital are observed for all groups except for bric and east european countries which show complementarity relationships

trade and direct investment in producer services and the domestic market for expertise foreign producer services can provide substantial benefits for domestic firms we build on earlier monopolistic competition models of intermediate producer services in this paper results show that 1 while foreign services are partial equilibrium substitutes for domestic skilled labour they may be general equilibrium complements 2 service trade can provide crucial missing inputs that reverse comparative advantage in final goods 3 the optimal tax on imported services may be a subsidy and 4 in our dynamic formulation there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform jel classification f12 f16 f23 commerce international et investissement direct dans les services de production et le marche interieur de l expertise les services de production en provenance de l etranger peuvent engendrer des avantages substantiels pour les entreprises domestiques dans ce memoire les auteurs construisent sur la base de certains modeles anterieurs de concurrence monopolistique de services de production intermediaires les resultats montrent que 1 alors que les services de l etranger sont des substituts pour le travail domestique specialise en equilibre partiel en equilibre general ils peuvent etre des complements 2 le commerce de services peut fournir des intrants cruciaux qui manquent et ce faisant renverser les avantages comparatifs dans les produits finaux 3 la fiscalite optimale imposee sur les services importes peut etre une subvention et 4 dans la formulation dynamique du modele il peut y avoir perte de revenus pour les travailleurs immobiles le long du sentier de transition ce qui suggere qu il peut y avoir des consequences importantes au plan de l equite associees a certaines reformes

adaptive economic growth this paper develops an evolutionary theory of adaptive growth understood as a product of structural change and economic self transformation based upon processes that are closely connected with but not reducible to the growth of knowledge the dominant connecting theme is enterprise the innovative variations it generates and the multiple connections between investment innovation demand and structural transformation in the market process the paper explores the dependence of macroeconomic productivity growth on the diversity of technical progress functions and income elasticities of demand at the industry level and the resolution of this diversity into patterns of economic change through market processes it is shown how industry growth rates are constrained by higher order processes of emergence that convert an ensemble of industry growth rates into an aggregate rate of growth the growth of productivity output and employment are determined mutually and endogenously and their values depend on the variation in the primary causal influences in the system

borrowing constraints human capital accumulation and growth abstract borrowing constraints increase aggregate savings and therefore may increase growth this paper argues however that by reducing human capital accumulation borrowing constraints also have negative effects on growth these effects are discussed in an overlapping generations model with endogenous growth empirical evidence for oecd and developing countries lend support to the main predictions of the model

modeling the co evolution of national industries and institutions important contributions within the realms of industrial dynamics and evolutionary economic theory have shown the need to explore the sources of industrial leadership in high tech industries several of these studies suggest that the co evolution between national industries and certain supporting institutions could play a fundamental role as a source of competitive advantage although an analysis of these processes still poses significant formal and theoretical challenges in this article we draw on previous contributions to formal evolutionary theorizing in order to build up a co evolution model suitable for the dynamic analysis of industrial leadership this model involves national firms competing on a worldwide level in a science based industry and co evolving with their respective national university systems certain national firms may influence university funding by institutional shaping while national university systems crucially affect the competitive advantage of said firms in the global market the model highlights important mechanisms through which institutional technological and market interrelated factors determine the dynamics of industrial leadership and eventually the emergence of industrial leadership shifts some of the implications regarding policy and future research on economic development follow

the economic commission for latin america and the caribbean eclac was right scale free complex networks and core periphery patterns in world trade the main purpose of this paper is to apply big data and scale free complex network techniques to the study of world trade with a specific focus on the investigation of eclac and structuralist ideas a secondary objective is to illustrate the potentialities of the use of the new science of complex networks in economics in what has been recently referred to as an econophysics research agenda we work with a trade network of 101 countries and 762 products sitc 4 which generated 1 756 224 trade links in 2013 the empirical results based on network analysis and computational methods reported here point in the direction of what eclac economists used to argue countries with higher income per capita concentrate in producing and exporting manufactured and complex goods at the center of the trade network countries with lower income per capita specialize in producing and exporting non complex commodities at the network s periphery

industrialization under perfect foresight a world economy with a continuum of countries abstract a dynamic model of international trade with a continuum of countries is presented the terms of trade path each country takes as given are endogenous in the model countries differ by the rate of time preference and have populations of overlapping generations of labor industrialization is modeled as the reallocation of labor to the sector with external increasing returns the process of which is gradual due to a demographic constraint in a perfect foresight equilibrium countries with lower time preference industrialize and autarky policy is not effective for industrialization orbits may exist for countries with positive time preference journal of economic literature classification numbers d90 f10 f43 o14 o40

capital income taxation and long run growth new perspectives abstract we study the effects of capital income taxation on long run growth in an endogenous growth framework with two distinguishing features endogenous population and international capital mobility endogenizing population growth introduces a new channel for taxes to affect economic growth and enables us to discriminate the effects of taxes on total versus per capita income growth allowing for capital mobility in the open economy we show how the effects of taxes on population growth and income growth across countries will vary in specific ways depending on the international income tax regimes and the relative preference bias of people towards the quantity and quality of their children the numerical results based on our calibrated model for the g 7 nations also indicate that although the effects of liberalizing capital flows on long run growth may not be very sizable the growth effects of changes in capital income tax rates can be tremendously magnified by cross border capital flows and cross border spillovers of policy effects

uniqueness and indeterminacy on the dynamics of endogenous growth abstract in this paper we study the dynamics of endogenous growth both in the model of lucas and in a generalization that incorporates a labor leisure choice we characterize the regions of the parameter space that give rise to unique equilibria as well as the regions that yield a continuum of equilibria with positive growth rates we find that such multiple equilibria exist for empirically very plausible parameters in particular when the lucas model is modified to incorporate endogenous labor journal of economic literature numbers e00 e3 o40

economic effects of the syrian war and the spread of the islamic state on the levant this paper uses a global computable general equilibrium framework with new detail on six levant countries the arab republic of egypt iraq jordan lebanon the syrian arab republic and turkey to quantify the direct and indirect economic effects of the syrian war and the advance of the islamic state on the levant syria and iraq bear the brunt of the direct economic costs while the other levant countries lose in per capita but not in aggregate terms the fact that the islamic state s spread has undermined regional trade adds to varying degrees to the direct costs in all levant economies and in the case of syria and iraq doubles the welfare losses all these countries are foregoing opportunities to expand intra levant trade and the associated gains in economic efficiency and diversification the average welfare effects are not indicative of within country incidence which varies among workers landowners and capitalists

the impact of the arab spring on the tunisian economy this paper uses synthetic control methodology to estimate the output loss in tunisia as a result of the arab spring the results suggest that the loss was 5 5 percent 5 1 percent and 6 4 percent of gdp in 2011 2012 and 2013 respectively these findings are robust to a series of tests including placebo tests and are consistent with those from an autoregressive distributed lag model of tunisia s economic growth moreover this paper finds that investment was the main channel through which the economy was adversely impacted by the arab spring

economics and the self organisation approach alfred marshall revisited the economics of alfred marshall is reassessed in the light of new developments in the natural sciences whereby a nonequilibrium thermodynamic approach is adopted to analyze self organization in dissipative structures it is argued that there is a clear correspondence between marshall s treatment of time irreversibility and this modern approach particularly when the latter is set in an informational context thus his principles is viewed as a very useful starting point in adapting the self organization approach for application in economics the main features of such a post marshallian approach to economics are discussed and compared with the mechanical approach of neoclassicism copyright 1993 by royal economic society

growth effects of flat rate taxes recent estimates of the potential growth effects of tax reform vary wildly ranging from zero to eight percentage points using an endogenous growth model we assess which model features and parameter values are important for determining the quantitative impact of tax reform we find that the critical parameters are factor shares depreciation rates the elasticity of intertemporal substitution and the elasticity of labor supply the elasticities of substitution in production on the other hand are relatively unimportant the quantitative estimates in several recent papers are compared with each other and with some of the evidence from u s experience we find that robert lucas s conclusion that tax reform would have little or no effect on the u s growth rate is theoretically robust and consistent with the evidence

the evolution of engel curves and its implications for structural change theory the tendency for expenditure engel curves to flatten out at high income levels is frequently cited as evidence that major shifts in household spending patterns take place as households become more affluent empirically little has been done to examine i how pervasive this tendency is across the engel curves of different goods and services ii whether the rate at which engel curves flatten out may significantly change over time and iii how robust engel curves are in the face of changes in the income distribution of households using data from the uk family expenditure survey we find evidence that the tendency for engel curves to flatten out which we dub saturation is indeed widespread across a wide range of goods and services however a tendency for their shape to shift over time and for these shifts to co move with changes in the income distribution of households casts some doubt on whether the declining slope of engel curves can be used to predict slowdowns in the growth rate of demand for particular goods and services

growth and the international transmission of business cycles two country single good real business cycle models predict that the cross country correlation of output is smaller than the cross country correlations of consumption and productivity in contrast to the evidence in historical samples the objective of this paper is to reproduce the observed empirical evidence in a two country real business cycle model with endogenous growth central features of the model include a nonmarket sector and international externalities in production the model generates realistic cross country correlations for output consumption and productivity with standard parameter values copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

biases in standard measures of intergenerational income dependence abstract estimates of the most common mobility measure the intergenerational elasticity can be severely biased if snapshots are used to approximate lifetime income however little is known about biases in other popular dependence measures using long swedish income series we provide such evidence for log linear and rank correlations and rank based transition probabilities attenuation bias is considerably weaker in rank based measures life cycle bias is strongest in the elasticity moderate in log linear correlations and small in rank based measures however there are important exceptions persistence in the tails of the distribution is considerably higher and long distance downward mobility lower than estimates from short run income suggest

does the worldwide shift of fdi from manufacturing to services accelerate economic growth a gmm estimation study abstract we examine the effect of manufacturing and service fdi foreign direct investment on their own sector growth the spillover to the other sectors and the overall economy in host countries we identify significant sectoral and inter industry spillover effects with various data classifications and types of fdi flows evidence reveals that growth effect of manufacturing fdi operates by stimulating activity in its own manufacturing sector and is prevalent in latin america caribbean in europe central asia middle to low income countries and economies with large industry share a surge of service fdi is likely to spur growth in service industries but hurt activity in manufacturing industries financial service fdi enhances growth in south east asia and the pacific high income countries and service based economies by stimulating activity in both manufacturing and service sectors however nonfinancial service fdi drains resources and hurts manufacturing industry in the same group of countries we conclude that a shift from manufacturing to service fdi is likely to lead to deindustrialization in certain regions and types of economies if this shift is spearheaded by nonfinancial fdi

can neoclassical economics handle complexity the fallacy of the oil spot dynamic abstract this paper is essentially a rebuttal of the view that neoclassical economics can handle complexity i have coined the locution oil spot dynamic to denote the neoclassical ability to subsume each and every new perspective the main part of the paper is devoted to showing why the oil spot dynamic cannot work with the complexity approach which is seen as a coherent stand alone research program that stems from the sfi economics program and manifests itself with different nuances the fallacy of the oil spot dynamic is relevant in this period in which economists are beginning to realize that the neoclassical samuelsonian paradigm no longer represents the common language of their profession the spread of the complexity approach and the dissolving notion of mainstream are here interpreted as indicative of a changing economics a short foray into the features of the process of change completes my arguments by showing that the shift from one paradigm to another has many interrelated dimensions and that there may be rigidities internalizing changes

the role of finance in environmental innovation diffusion an evolutionary modeling approach abstract the implementation of climate adaptation and mitigation policies depend on the development of green technologies whose diffusion is constrained by a number of barriers which prevent them to spread broadly and at a fast pace by means of an agent based computational model the paper investigates the macro and micro economic dynamics considering the role of a traditional commercial bank and a state investment bank that explicitly supports green investments simulation results emphasize that green finance matter and that the market diffusion of environmental innovation is more pronounced when the presence of the public investment bank is combined with strong consumers preferences oriented towards environmental quality the relevance of the paper is twofold besides contributing to the literature on the finance innovation nexus by considering the role of climate finance within a complex systems framework it provides a model that can be used as a tool to explore policies to foster environmental innovation diffusion

is the united states still a land of opportunity recent trends in intergenerational mobility abstract we present new evidence on trends in intergenerational mobility in the united states using administrative earnings records we find that percentile rank based measures of intergenerational mobility have remained extremely stable for the 1971 1993 birth cohorts for children born between 1971 and 1986 we measure intergenerational mobility based on the correlation between parent and child income percentile ranks for more recent cohorts we measure mobility as the correlation between a child s probability of attending college and her parents income rank we also calculate transition probabilities such as a child s chances of reaching the top quintile of the income distribution starting from the bottom quintile based on all of these measures we find that children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s however because inequality has risen the consequences of the birth lottery t

capital as a layer cake a systems approach to capital and its multi level structure abstract we elaborate a systems approach to the nature of capital that develops the work of menger and lachmann the ml trajectory we propose a layer cake metaphor to capture the kernel of the ml approach and contrast it with the neoclassical metaphor of capital as an amorphous homogeneous jelly according to the ml approach capital is combinatorial and is organized structurally and relationally the approach examines capital as it exists out there in the world as it is actually formed and experienced by entrepreneurs capital goods only exist and become productive once they are connected in entrepreneurs production plans so that the focus is upon relations of complementarity between heterogeneous capital goods as used in production hence capital has a layered structure there is a nested hierarchy of capital goods capital combinations and economy wide capital structures using bunge s theory of systems we investigate how each of these entities is a concrete system at a different layer of economic reality both capital combinations and overall capital structure arise in an irreversible causal genetic process in real time and capital structure has the added distinction of being an emergent spontaneous order

income convergence within and between countries we study how trade changes the rate of income convergence within and between countries in a model of endogenous growth an externality in the production of human capital implies that inequality slows down growth under autarky eventually incomes converge raising the growth rate trade accelerates slows down growth and the rate of income convergence in the poor rich country in the long run trade ensures that countries grow at the same rate and that the ratio of their incomes tends to 1 trade pattern reversals are possible since the initially wealthy country may be overtaken by the poor country the purpose of this paper is to study how trade affects the pattern of income convergence within countries and between countries in an endogenous growth model moreover we analyze the related issue of how income inequality alters the effects of trade we use a dynamic 2 x 2 factor proportions model with endogenous growth to examine income convergence the factors of production are unskilled labor and human capital growth proceeds through the accumulation of human capital by agents who are differentiated by their stocks of human capital agents live a single period during which they spend resources in their descendants education the expenditure in a descendant s education enters the utility function of each agent in our model the accumulation of human capital is the result of both formal and informal processes the formal process corresponds to schooling and depends on parental expenditure in education the informal process of producing human capital corresponds to the education agents receive in their homes and through social interaction with neighbors and schoolmates in the informal process the first effect depends on the education of the parents while the second corresponds to an externality acting through the average level of human capital in society we begin our study by examining income convergence in a closed economy as the society s stock of human capital increases the relative price of the equitatively distributed factor unskilled labor goes up which tends to reduce long term inequality on the other hand rich agents spend a higher proportion of their income in education tending to raise inequality we derive a sufficient condition for the former effect to outweigh the latter effect that is for inequality to disappear in the

the market failure and the systemic failure rationales in technological innovation systems abstract in this paper we analyse the conceptual relationship between the market failure rationale and the systemic failure rationale as justifications for policy intervention within an innovation systems is analytical framework current policy analyses in the is literature are characterised by two contrasting theoretical positions regarding the way in which both rationales are conceptually interrelated in one strand of the literature the market failure rationale is considered as a valid although insufficient justification for policy intervention that therefore needs to be complemented by the arguments put forward by the systemic failure rationale this perspective implicitly presents the systemic failure framework as a more general approach than the market failure perspective on the other hand a number of is policy contributions explicitly reject the market failure approach and consider it a flawed argument for government intervention in this theoretical view the systemic failure approach is thus proposed as a more appropriate alternative innovation policy rationale despite their relevance as the theoretical bases that currently underpin actual innovation policy design an analysis of the robustness and conceptual coherence of these contrasting perspectives has not been provided so far in this work we set the analytical steps we deem required for this analysis and investigate under which premises the relationship between the market failure and the system failure rationales proposed by these two policy perspectives is valid from a theoretical point of view

systems thinking market failure and the development of innovation policy the case of australia innovation policy is increasingly informed from the perspective of a national innovation system nis but despite the fact that research findings emphasize the importance of national differences in the framing conditions for innovation policy prescriptions tend to be uniform justifications for innovation policy generally relate to notions of market failure that are applicable in all nations in all conditions in this paper we develop a broad framework for nis analysis involving free market coordination and complex evolutionary system approaches within this framework we explore the evolving relationship between market failure and systems approaches to innovation policy in the case of australia drawing on information and analysis collected for a major review of australia s nis and the government s 10 year plan in response to it we show how the free market trajectory of policy making of past decades is being extended complemented and refocused by new approaches to complex evolutionary system thinking these approaches are shown to emphasize the importance of systemic connectivity evolving institutions and organizational capabilities nonetheless despite the fact that there has been much progress in this direction in the australian debate the predominant logic behind policy choices still remains one of addressing market failure and the primary focus of policy attention continues to be science and research rather than demand led approaches we discuss how the development and elaboration of notions of systems failure rather than just market failure can further improve policy making in the future

heterogeneous income profiles and lifecycle bias in intergenerational mobility estimation using short snapshots of income in intergenerational mobility estimation causes lifecycle bias if the snapshots cannot mimic lifetime outcomes we use uniquely long series of swedish income data to show that this bias is large and to examine current strategies to reduce it we confirm that lifecycle bias is smallest when incomes are measured around midlife a central implication from a widely adopted generalization of the classical errors in variables model however the model cannot predict the ideal age of measurement or eliminate lifecycle bias at other ages we illustrate how extensions of this model can reduce the bias further

regression toward mediocrity in economic stature this paper provides estimates of the correlation in lifetime earnings between fathers and sons intergenerational data from the national longitudinal survey are used earlier studies conducted for the united states report elasticities of children s earnings with respect to parent s earnings of 0 2 or less suggesting extensive integenerational mobility these estimates however are biased downward by error contaminated measures of lifetime economic status estimates presented in this paper correct for the problem of measurement error and find the intergenerational correlation in income to be on the order of 0 4 this suggests considerably less intergenerational mobility than previously believed jel j62

intergenerational income mobility in the united states social scientists and policy analysts have long expressed concern about the extent of intergenerational income mobility in the united states but remarkably little empirical evidence is available the few existing estimates of the intergenerational correlation in income have been biased downward by measurement error unrepresentative samples or both new estimates based on intergenerational data from the panel study of income dynamics imply that the intergenerational correlation in long run income is at least 0 4 indicating dramatically less mobility than suggested by earlier research copyright 1992 by american economic association

from simplistic to complex systems in economics the applicability of complex systems theory in economics is evaluated and compared with standard approaches to economic theorising based upon constrained optimisation a complex system is defined in the economic context and differentiated from complex systems in physio chemical and biological settings it is explained why it is necessary to approach economic analysis from a network rather than a production and utility function perspective when we are dealing with complex systems it is argued that much of heterodox thought particularly in neo schumpeterian and neo austrian evolutionary economics can be placed within a complex systems perspective upon the economy the challenge is to replace prevailing simplistic theories based in constrained optimisation with simple theories derived from network representations in which value is created through the establishment of new connections between elements

teachers pay for performance in the long run the dynamic pattern of treatment effects on students educational and labour market outcomes in adulthood this paper examines the dynamic effects of a teachers pay for performance experiment on long term outcomes at adulthood the program led to a gradual increase in university education of the treated high school students reaching an increase of 0 25 years of schooling by age 28 30 the effects on employment and earnings were initially negative coinciding with a higher rate of enrollment in university but became positive and significant with time these gains are largely mediated by the positive effect of the program on several high school outcomes including quantitative and qualitative gains in the high stakes matriculation exams

fdi waves waves of neglect of political risk studies of the impact of local political risk on foreign direct investment inflows overlook that worldwide fdi comes in waves using a simple model we show that the impact of political risk on fdi inflows is likely to be weaker the larger the worldwide amount of fdi which may question standard estimates and their policy implications using a large sample of developing and developed economies we estimate the sensitivity of the distribution of fdi inflows across countries to the local political risk we find that it is a decreasing function of the worldwide amount of fdi this finding has been upheld after many robustness checks

the intergenerational transmission of employers we find that about 40 of a cohort of young canadian men have been employed at some time with an employer for which their father also worked and 6 9 have the same employer in adulthood the intergenerational transmission of employers is positively related to paternal earnings particularly at the very top of the earnings distribution and to the presence of self employment income and the number of employers with which the father has had direct contact it has an important influence on nonlinear patterns in the intergenerational elasticity of earnings

on the complexities of complex economic dynamics complex economic nonlinear dynamics endogenously do not converge to a point a limit cycle or an explosion their study developed out of earlier studies of cybernetic catastrophic and chaotic systems complexity analysis stresses interactions among dispersed agents without a global controller tangled hierarchies adaptive learning evolution and novelty and out of equilibrium dynamics complexity methods include interacting particle systems self organized criticality and evolutionary game theory to simulate artificial stock markets and other phenomena theoretically bounded rationality replaces rational expectations complexity theory influences empirical methods and restructures policy debates

economic growth and the structure of long term development this volume collects some of the papers presented at the 82nd round table conference of the international economic association that was organised in collaboration with fondazione eni enrico mattei the book considers different approaches to the analysis of economic growth and it is organised in five parts par i is devoted to empirical evidence part ii contains six papers which present a series of models based on different approaches but with special emphasis on endogenous growth and on schumpeterian models of growth and fluctuations part iii of the book is devoted to the impact of international trade on economic development part iv examines the effects of economic development on the natural environment the final part of the book part v contains the concluding evaluations contributors p aghion r aversi d ben david g bertola o castellino f donati g dosi w easterly s fabiani c freeman r goodwin j helliwell e helpman p howitt r king m landesmann r levine s lombardini k g maler w d nordhaus l l pasinetti s rebelo a sen l soete r m solow m syrquin b verspagen s zervos

a comparison of intergenerational mobility curves in germany norway sweden and the us we examine intergenerational mobility differences between germany norway sweden and the us using ranks we find that the us is substantially less intergenerationally mobile than the three european countries and that the most mobile region of the us is less mobile than the least mobile regions of norway and sweden using a linear estimator of income share mobility we find that the four countries have very similar rates of intergenerational mobility however when we use non parametric versions of rank and income share mobility we find that the us tends to experience lower upward mobility at the bottom of the income distribution than norway and sweden

equilibrium dynamics in two sector models of endogenous growth abstract this paper considers two extensions of the uzawa lucas framework in our first extension physical capital is included as an input of the educational sector in our second extension leisure considerations are assumed to play a positive role in agents welfare the case with physical capital in the production of education features under standard conditions a unique steady state and thus the dynamics are qualitatively similar to those of the original uzawa lucas framework in our second model with leisure there could be a multiplicity of steady states with different rates of growth what determines here the chosen rate of growth is the initial relative amount of physical and human capital our results therefore illustrate that in a world without externalities there could coexist different long term growth rates

total factor productivity vs realism revisited the case of the south korean steel industry this paper presents key features of the development of the south korean steel industry through the critical examination of an article by truett and truett despite their claim to exhibit realism by use of a translog cost function their methodology has strong affinities with the methods of measuring total factor productivity growth which have long been known as invalid but continue to be applied not least to the experience of east asian countries it will be argued that the theoretical and empirical flaws involved with these methods invalidate their results and corresponding policy implications above all by showing that the assumptions for their calculation do not hold in terms of the economic conditions of the industry the paper points to a different understanding of realism than that conceived by and for their study copyright 2005 oxford university press

the problem of population and growth a review of the literature from malthus to contemporary models of endogenous population and endogenous growth abstract this paper deals with the evolution of the literature on the problem of population and growth from the classical period to the recent literature on endogenous growth and development the problem concerns two distinct issues 1 how to explain the observed covariation of the levels and rates of growth of per capita income and population size over time and space and 2 how to improve the human condition represented by these variables through an accommodating social policy the evolution of the literature we survey is reflected by the progressive treatment of key variables as endogenous rather than exogenous to the growth process it is also reflected by a shift from the historical concern about population explosion and its implications for growth to the more recent concern about the association between growth and population implosion in many developed countries

a rostovian model of endogenous growth and underdevelopment traps the paper presents a model which combines self sustained growth and underdevelopment traps into a common analytical framework we provide an analytical interpretations to rostow s observation that there is a decisive interval in the history of a society when growth becomes its normal condition and to the empirical evidence that some countries seem not to have achieved this stage yet the model exhibits aggregate non convexities and thresholds which separate a region where growth is solow type with convergence to a stationary steady state from a region where growth is romer type with endogenous self sustained growth in some critical stages of development there exist multiple equilibrium trajectories consistent with alternative sets of self fulfilling beliefs

the kinetics of capital formation and economic organisation we examine the inseparability of capital formation and economic organisation in capitalist economic systems capital possesses a complex multilevel micro meso macro structure that is always in the process of transformation levels of the capital structure are interdependent and interactive correspondingly economic organisation at these various levels is not an independent entity in itself it occurs as a by product and structural aspect of capital formation rather than the transaction our focal unit of analysis is a production notion the capital combination that emanates from the kinetic organisation of material by human agency we consider the behaviour of entrepreneurs as causal agents in specifying and appraising potential capital combinations reorganising production and scrapping capital entrepreneurs combinatorial actions often change existing materials to serve functions for which they were not originally designed thereby changing capital structures and the shape and boundaries of economic organisation at different levels of economic complexity capital is created in a dynamic knowledge generation process that depends on entrepreneurs perceptions of gaps in the capital structure copyright the author 2012 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

critical survey endogenous growth theory a critical assessment a critical assessment is made of endogenous growth theory from the perspective of recent developments within economics as a discipline these include its increasing mathematical formalisation its focus upon microfoundations the casual use of econometrics to test models and the incorporation of factors that have traditionally been outside mainstream economics it is found that the theory focuses upon market imperfections and technological progress in a variety of ways and reconstructs their impact upon the macroeconomy as a growth rather than as a level effect whilst the growth rate is endogenised this leads to the problem of multiple equilibria and extremely complex dynamics the generalisation from exogenous growth theory is however associated with even more extreme assumptions and analytical distance from the socioeconomic processes of growth itself copyright 2000 by oxford university press

econometric modelling in the presence of evolutionary change a methodology is offered which can be used to construct an econometric model in the presence of structural change of an evolutionary type the theoretical basis for such modelling is drawn from the self organisation approach and operationalised in the context of the logistic diffusion growth model the latter is augmented to allow for the impact of exogenous effects upon both the diffusion rate and boundary limit we show how the hypothesis of augmented logistic diffusion can be falsified using econometric methods an illustrative case study is used namely the growth and decline of australian building society deposits with the aid of this example it is shown how the approach could be of use to both economic forecasters and regulators in conditions of structural change where conventional econometric methods are often inappropriate jel classification c51 c53 e42 e47 g18 o31

fortunate sons new estimates of intergenerational mobility in the united states using social security earnings data previous studies relying on short term averages of fathers earnings have estimated the intergenerational elasticity ige in earnings to be approximately 0 4 due to persistent transitory fluctuations these estimates have been biased down by approximately 30 or more using administrative data containing the earnings histories of parents and children the ige is estimated to be around 0 6 this suggests that the united states is substantially less mobile than previous research indicated estimates of intergenerational mobility are significantly lower for families with little or no wealth offering empirical support for theoretical models that predict differences due to borrowing constraints

meso comes to markets comment on markets come to bits mirowski s research programme of markomata formally sets out to model the diversity of market forms by making use of the mathematical theory of automata and then to taxonomize and organize these entities by means of a theory of evolution mirowski this issue this suggests a new sort of economics in which it is markets that evolve not people systems that evolve not agents prosthesis that evolve not preferences and rules that evolve not information economies evolve people do not this proposition is both obvious and true making it an excellent foundation for an evolutionary social science so if we are to take mirowski s program seriously as a general framework for economic analysis which we think we certainly should then it is important to recognize that although mirowski s unified rubric of markomata elides agency and is instead based upon john von neumann s theory of automata as a model for the study of social institutions the separate lines of research into markets as computational entities are all still very much but a microeconomics markomata is a theory of the core microeconomic building blocks of an economic system as well as a theory of their evolutionary principles i e a microeconomics but it is not yet a theory of the whole economy yet it is our view that mirowski s markomata program can indeed be the basis for such a general theory when analytically expounded in terms of the new evolutionary economic framework of micro meso macro dopfer et al 2004 and dopfer 2005 in which market automata mirowski and somefun 1998 and potts 2001 are abstracted as a special central instance of generic meso rules dopfer and potts 2004 which is to suggest that the mirowski framework of markomata can be yet further developed

poor little rich kids the role of nature versus nurture in wealth and other economic outcomes and behaviors wealth is highly correlated between parents and their children however little is known about the extent to which these relationships are genetic or determined by environmental factors we use administrative data on the net wealth of a large sample of swedish adoptees merged with similar information for their biological and adoptive parents comparing the relationship between the wealth of adopted and biological parents and that of the adopted child we find that even prior to any inheritance there is a substantial role for environment and a much smaller role for pre birth factors and we find little evidence that nature nurture interactions are important when bequests are taken into account the role of adoptive parental wealth becomes much stronger our findings suggest that wealth transmission is not primarily because children from wealthier families are inherently more talented or more able but that even in relatively egalitarian sweden wealth begets wealth we further build on the existing literature by providing a more comprehensive view of the role of nature and nurture on intergenerational mobility looking at a wide range of different outcomes using a common sample and method we find that environmental influences are relatively more important for wealth related variables such as savings and investment decisions than for human capital we conclude by studying consumption as an overall measure of welfare and find that like wealth it is more determined by environment than by biology

endogenous growth and intermediation in an archipelago economy a general equilibrium model based on the parable of an economy of many islands shows the market imperfections in the intermediation activity affect economic growth and possibly prevent take off into sustained growth the inhabitants of different islands accumulate heterogeneous assets and transportation type intermediation allows for better allocation of the productive resources the development process is accompanied by a reduction in intermediation costs which induces firms to adopt more efficient techniques and sustains economic growth a laissez faire economy suffers from two distortions the existence of market imperfections and a thick market externality

blockchain and the evolution of institutional technologies implications for innovation policy abstract for the past century economists have proposed a suite of theories relating to industrial dynamics technological change and innovation there has been an implication in these models that the institutional environment is stable however a new class of institutional technologies most notably blockchain technology lower the cost of institutional entrepreneurship along these margins propelling a process of institutional evolution this presents a new type of innovation process applicable to the formation and development of institutions for economic governance and coordination this paper develops a replicator dynamic model of institutional innovation and proposes some implications of this innovation for innovation policy given the influence of public policies on transaction costs and associated institutional choices it is indicated that policy settings conductive to the adoption and use of blockchain technology would elicit entrepreneurial experiments in institutional forms harnessing new coordinative possibilities in economic exchange conceptualisation of blockchain related public policy an innovation policy in its own right has significant implications for the operation and understanding of open innovation systems in a globalised context

knowledge dynamics structural change and the geography of business services the article provides a review of and presents some empirical evidence on the dynamics of knowledge structural change and spatial concentration of economic activities focusing on the case of business services it explores how the role of knowledge has evolved in relation to the dimensions of i science technology and structural change ii the long term processes of tertiarisation of the economy in particular the growth of business services iii the spatial concentration of business services as an outcome of the increasing volume and complexity of knowledge and the need to manage it through spatial proximity our arguments are supported by empirical evidence on the spatial concentration of business services in the european regions

the market for preferences learning processes are widely held to be the mechanism by which boundedly rational agents adapt to environmental changes we argue that this same outcome might also be achieved by a different mechanism namely specialisation and the division of knowledge which we here extend to the consumer side of the economy we distinguish between high level preferences and low level preferences as nested systems of rules used to solve particular choice problems we argue that agents while sovereign in high level preferences may often find it expedient to acquire in a pseudo market the low level preferences in order to make good choices when purchasing complex commodities about which they have little or no experience a market for preferences arises when environmental complexity overwhelms learning possibilities and leads agents to make use of other people s specialised knowledge and decision rules

global effects of developed country trade restrictions on textiles and apparel this paper uses an applied general equilibrium model to analyze the impacts of quota and tariff restrictions used by developed countries against textile and clothing imports from developing countries in the model countries are represented by their actual size in terms of gdp weakening rent transfer effects compared to partial equilibrium analysis results based on 1986 data suggest annual global gains from elimination of quotas and tariffs of around 23 billion in aggregate developing countries gain around 8 billion suggesting that gains to developing countries from improved access more than offset losses from foregone rent transfers as quotas and tariffs are abolished copyright 1990 by royal economic society

life cycle variations in the association between current and lifetime income replication and extension for sweden we apply haider and solon s generalized errors in variables model to swedish income tax data to produce estimates of the association between current and lifetime income our estimates demonstrate strong life cycle patterns this implies that the widespread use of current income as a proxy for lifetime income leads to inconsistent parameter estimates i e life cycle bias even when the proxy is used as the dependent variable estimates for comparable cohorts of swedish and american men demonstrate surprising similarities there are however significant gender and cohort differences in this association that lead to statistically significant and quantitatively meaningful differences in life cycle biases

snapshots versus movies empirical studies of the intergenerational inheritance of economic status should use observations on complete lifetime status profiles of parents and children to be consistent with underlying theory but they cannot only snapshots rather than movies on status are currently available in samples estimates of the degree of intergenerational inheritance may therefore be subject to lifecycle biases the paper investigates these in the context of a lifecycle earnings model and shows that these biases may be large that their direction varies and that correction methods suggested hitherto have questionable reliability until more complete data sets become available researchers should be more temperate in the conclusions they draw

public spending endogenous growth and endogenous fluctuations abstract this article studies indeterminacy and endogenous growth in a simple one sector model of capital accumulation endowed with inelastic labor supply in which the presence of public goods creates positive externalities both in the production and the consumption sectors because of increasing returns in the utility function the economy exhibits not only perpetual growth but also indeterminacy and therefore endogenous stochastic growth fluctuations the possibility of sunspot equilibrium growth paths is shown to be consistent with plausible parameter values journal of economic literatureclassification numbers e32 o41 h40

do exporters gain from vers previous literature has concentrated on the rent transfer accruing to exporting countries when a voluntary export restraint ver is binding this paper studies the efficiency and distributional effects arising when vers force factors out of industries in which they are most productive a theoretical model of the industry under the ver is developed to establish qualitative conditions under which a ver will result in spillovers of exports to unrestricted markets industry contraction and loss in national welfare key parameters of demand and supply are estimated for leather footwear exports from taiwan subject to the u s orderly marketing agreement and their implications explored in a calibrated simulation exercise the results make a strong indictment of vers for most plausible parameter values vers distort exports reduce industry size and cause overall economic losses especially if the affected industry is large

economic perspectives on the development of complex products for increasingly demanding customers rival firms produce products with a variety of characteristics it is typically assumed that consumers purchase those products that most closely match their ideal set of characteristics orthodox production theory economics offers no analysis of how to divide limited product development budgets between different characteristics furthermore orthodox consumer economics assumes buyers make compensatory trade offs between different product characteristics this approach ignores problems caused by bounded rationality that in complex choice environments leads buyers to formulate simplifying heuristics such as hierarchical non compensatory preferences over characteristics an integrative analytical framework is developed drawing upon orthodox economics behavioural economics and evolutionary economics implications for the relationship between incremental product development and the firm s evolving capabilities are emphasized

risky business political instability and greenfield foreign direct investment in the arab world which foreign direct investments are most affected by political instability analysis of quarterly greenfield investment flows into countries in the middle east and north africa during the period from 2003 to 2012 shows that adverse political shocks are associated with significantly reduced investment inflows in the non resource tradable sectors by contrast investments in natural resource sectors and non tradable activities appear insensitive to such shocks political instability is thus associated with increased reliance on non tradables and aggravated resource dependence

a microeconomic mechanism for economic growth this paper constructs a dynamic general equilibrium model in which economic growth is explained by the evolution of the division of labor the relationships among the accumulation of human capital the evolution of the division of labor endogenous comparative advantage trade dependence the market structure and economic growth are investigated

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

the limits of trade policy reform in developing countries trade reform is now raising some new issues this paper deals with three sets of questions first how can trade reform be sustained can governments convince business labor or consumers that trade reform will be lasting so as to forestall possible adverse reactions that would jeopardize the sustainability of the reform second what role should trade reform play when it is implemented in the context of macroeconomic instability are there potential conflicts between the standard desiderata for trade reform and the requirements of macro stability finally should we be worried about the consequences of trade reform in the imperfectly competitive market environments that characterize the developing economies

on endogenous growth with physical and human capital this paper presents a class of models in which agents may devote part of their nonleisure activities to going to school so as to increase the efficiency units of labor they supply to the firms and the wages they receive the interaction among the technology of human capital accumulation and agents preferences will determine endogenously the economy s rate of growth given a constant returns to scale technology for physical capital accumulation we characterize the set of steady states as a ray from the origin and show the global convergence of every off balanced path to some point on this ray further properties concerning the dynamic evolution of the state and control variables around the ray of steady states are also established our analysis is useful to understand the role played by the technologies of physical and human capital in the process of accumulation and to evaluate the impact of policies geared toward attaining higher levels of capital our results highlight the importance of human capital

optimal public investments in education and endogenous growth optimal public investments in human capital through subsidizing private education or providing public education are considered in an endogenous growth model with externalities subsidizing private education stimulates growth improves welfare and has no distributional effect while reducing income inequality as in the literature public education hinders the growth of the average income unless externalities are strong enough and reduces the welfare of the median agent unless initial income inequality is sufficiently high societies with high income inequality may provide public education and will replace it with subsidized private education in some future periods as income converges copyright 1996 by the editors of the scandinavian journal of economics

economics imperialism and the new development economics as kuhnian paradigm shift abstract this paper addresses the evolving relationship between economics and other social sciences it sets the present intellectual scene as one in which economics imperialism is rampaging across other disciplines the designs of economics upon development studies are examined in terms of the kuhnian notion of paradigm shift thereby the conclusion is drawn of the potential prospect of open debate around the economy and development not least outside economics itself but there is danger of economics imperialism in the form of the post washington consensus foreclosing the analytical agenda at the expense of approaches based on the political economy of capitalism

the anatomy of emergence with a focus upon capital formation abstract emergence is a unifying theme of both evolutionary economics and complex systems theory in spite of this centrality emergence in economics has not been subject to an extensive critical analysis this paper remedies this deficit we identify several conditions that economic patterns i e rule systems structures must satisfy to qualify as emergent 1 material realization emergent patterns are realized in physical structures and processes 2 coherence pattern is not a mere aggregate but a systemic whole 3 non distributivity pattern possesses global properties absent from its parts 4 structure dependence systemic properties depend upon connective structure these four core features are common to all forms of emergence in economics evolutionary economic systems also exhibit extra strength versions of emergence which require that patterns possess one or more additional features 5 genuine novelty 6 unpredictability in principle and 7 irreducibility we introduce three basic forms of emergence that occur in economic systems minimal diachronic and synchronic emergence and apply these ideas to capital formation at all levels of economic order the economy wide capital structure exhibits strongly emergent properties both diachronic and synchronic that depend on its structural and functional organization it is not a mere aggregate of capital goods within the realm of capital phenomena we also compare the distinguishing characteristics of emergent and spontaneous self organizing orders we provide a case study of the iphone as an emergent capital pattern to illustrate conditions 1 7 above and the different types of emergence

network structure and the diffusion of knowledge this paper models knowledge diffusion as a barter process in which agents exchange different types of knowledge this is intended to capture the observed practice of informal knowledge trading agents are located on a network and are directly connected with a small number of other agents agents repeatedly meet those with whom direct connections exist and trade if mutually profitable trades exist in this way knowledge diffuses throughout the economy we examine the relationship between network architecture and diffusion performance we consider the space of structures that fall between at one extreme a network in which every agent is connected to n nearest neighbours and at the other extreme a network with each agent being connected to on average n randomly chosen agents we find that the performance of the system exhibits clear small world properties in that the steady state level of average knowledge is maximal when the structure is a small world that is when most connections are local but roughly 10 percent of them are long distance the variance of knowledge levels among agents is maximal in the small world region whereas the coefficient of variation is minimal we explain these results as reflecting the dynamics of knowledge transmission as affected by the architecture of connections among agents

endogenous fertility multiple growth paths and economic convergence abstract this paper extends the cass koopmans optimal growth model to allow for endogenous fertility choice it is shown that if agents choose their fertility rate then the net rate of return on capital marginal product of capital minus the population growth rate may not be monotonically decreasing in capital in this case multiple steady states and growth paths may emerge which can explain the persistent differentials in income between poor and rich countries as well as the existence of development miracles and disasters the paper provides also empirical evidence which supports the existence of multiple convergence groups and is consistent with the theoretical model

macroeconomic structure endogenous technical change and growth this paper shows the relevance of the macroeconomic structure that governs short term changes in aggregate demand and income distribution in the determination of long term growth rates it develops a new growth model by introducing endogenous technical change into a keynesian marxist synthesis model of accumulation and distribution this model has multiple equilibria a high growth equilibrium that is stable if rising wage share leads to an increase in investment and real wages are somewhat rigid and a low growth equilibrium that is stable under opposite circumstances based on this result the paper discusses how institutions and history matter in long term growth copyright 1994 by oxford university press

intergenerational top income mobility in sweden capitalist dynasties in the land of equal opportunity this paper presents new evidence on intergenerational mobility at the top of the income and earnings distributions using a large dataset of matched father son pairs in sweden we find that intergenerational transmission is very strong at the top more so for income than for earnings at the extreme top top 0 1 income transmission is remarkable with an intergenerational elasticity of approximately 0 9 we also study potential transmission mechanisms and find that iq non cognitive skills and education of the sons are all unlikely channels in explaining the strong transmission within the top percentile increases in the income of the fathers if they are related at all are negatively associated with these variables wealth on the other hand has a significantly positive association our results suggest that sweden known for having relatively high intergenerational mobility in general is a society in which transmission remains strong at the very top of the distribution and wealth is the most likely channel

analysis of a two sector model of endogenous growth with capital income taxation this paper addresses a two sector model of endogenous growth in which one sector produces final goods and the other produces new human capital both sectors employ human as well as physical capital under constant returns to scale technologies unlike existing studies of this type of model that have mostly concentrated on steady state analysis or on numerical simulations of calibrated models this paper presents an analytical argument concerning the dynamic behavior of the growth path and the effects of capital income taxation in and out of the steady growth equilibrium it is demonstrated that the dynamic behavior of the economy and some policy effects depend heavily upon the magnitude of factor intensity used in each production sector copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

tax rate uncertainty and the sensitivity of consumption to income in an overlapping generations model abstract a well documented feature of u s data is that the aggregate consumption is a smoother process than income an overlapping generations model with a time nonseparable utility function is developed to characterize the effect of income tax uncertainty on the degree of consumption smoothness the model predicts that an increased tax uncertainty combined with tax financed production externality makes the aggregate consumption smoother for a plausible range of intertemporal substitution in consumption a calibration experiment indicates that the observed long term smoothness of aggregate consumption is consistent with the model s predicted consumption process