Economic Freedom and the Quality of Life: An Empirical Analysis

Previous empirical research on the social and economic impact of freedom has tended to focus on the link between freedom and economic growth rates. Only a few studies have looked at freedom's effect on the quality of life, and these generally focused on the effect of political freedom. Here, we attempt to bridge this gap by analyzing the effect of economic freedom on the quality of life. Taking advantage of newly developed measures of economic freedom, we analyze the impact of economic freedom on life expectancy and literacy rates. We find that greater economic freedom enhances the quality of life both across nations and increases the improvements in the quality of life over time.     

The “Business Climate” and Economic Inequality

“Business climate indexes” characterize state economic policies, and are often used to try to influence economic policy debate. However, they are also useful in research as summaries of a large number of state policies that cannot be studied simultaneously. Prior research found that business climate indexes focused on productivity and quality of life do not predict economic growth, while indexes emphasizing taxes and costs of doing business indicate that low‐tax, low‐cost states have faster growth of employment, wages, and output. In this paper, we study the relationship between these two categories of business climate indexes and the promotion of equality or inequality. We do not find that the productivity/quality‐of‐life indexes predict more equitable outcomes, although some of the policies underlying them suggest they might. We do find, however, that the same tax‐and‐cost‐related indexes that are associated with higher economic growth are also associated with increases in inequality.     

Contributors

After a quarter century of environmental regulation in this country, significant environmental threats remain. Why has the regulatory system failed to fully address our environmental problems?

The goal of this paper is to suggest that the roots of environmental problems, and the failure of environmental regulation, are deeply embedded in the processes that generate economic growth. The logic of the argument to be presented will take the following form: long-run economic growth relies on the creation of new industries and new forms of economic activity; these new forms of economic activity create new kinds of environmental problems; these new forms of economic activity constitute vested political interests that oppose environmental regulation. Each of the three main sections of the paper will provide theoretical and empirical justification for each component part of the basic argument.     

Accuracy and reliability of Spanish regional accounts (CRE-95)

Are estimates accurate? Are these data reliable? Can we evaluate whether successive revisions of the first estimate bring additional information, or whether they are due to the correction of earlier inaccuracies of bias, which does not add any useful information to economic analysts? The response is that a statistical technique, known in economic literature as news versus noise analysis can be used to answer these questions. These concepts were first introduced in ground breaking articles by Mankiw et?al. (1984) on revisions to money stock and Mankiw and Shapiro (1986) on revisions to Gross National Product in the United States. This method claims that the proximity of the first estimate to the definitive one can be a clue as to its quality. Many studies investigate the magnitude and nature of errors contained throughout the National Account System estimates; however, economic literature offers no option for judging accuracy and reliability in the main Regional Account aggregates, and therefore, this methodology is adopted to assess the accuracy and reliability of the revision process of the Gross Value Added (GVA) growth rates at basic prices, 1995 Base, within the Spanish Regional Accounts (CRE-95). For that purpose, this study examines five comprehensive revisions analyses for a range of eighteen Autonomous Communities (NUTS-2) during 1999. Main conclusions are: the quality of the estimates tends to increase over time; and the process can be explained better as reflecting new information than as correcting measurement errors so that the National Statistics Institute??s procedure can be deemed to be suitable.     

Can sustained economic growth and declining population coexist?

Most of the developed countries have been experiencing sub-replacement fertility. This leads to worries over the sustainability of economic growth in these countries. Given this concern, we ask the following questions: Is there a force that would allow economic growth and declining population to coexist? Is there a mechanism that could reverse the decline in fertility? We argue that returns to human capital in production provide the key to understanding this relation. Our theoretical framework predicts that, when the degree of increasing returns to human capital in traditional production technologies falls, advanced economies switch their productive efforts from labor-oriented technologies that require a constant creation of young workforce toward human capital-oriented technologies that support an ageing population. We call this shift the “endogenous efficiency-augmenting mechanism”. This suggests that sustained economic growth and a declining population can coexist in the long run. Finally, we compare our model against the data and find: (i) The degree of increasing returns to human capital has been falling over time throughout the world along with population growth rates. (ii) Increasing returns to human capital and population growth rates are positively correlated. (iii) Predictions of our model are consistent with what the data reveal.     

The old and the new: the evolution of polymer and biomedical clusters in Ohio and Sweden

This paper examines the rapid growth of the polymer-based and biomedical clusters in Ohio and Sweden – two regions of similar size and with similar traditions undergoing similar industrial restructuring. Two issues are addressed: First, why has growth been so strong in these particular clusters, i.e., can we identify the sources of the growth and dynamics in these sectors? Second, why do these two clusters differ in Ohio and Sweden in terms of size, level and type of activity, number and composition of actors, size structure of firms and growth patterns over the last couple of decades? In particular, what is the role of public policies as well as cultural, historical, and geographic factors? Our main conclusions are (1) that there is strong path dependence in both clusters in both countries, and (2) that the key to rapid development is a high absorptive capacity combined with rapid diffusion to new potential users. Our policy discussion addresses these issues.     

On novelty and economics: Schumpeter’s paradox

Is novelty as such an intra or extra-economic phenomenon? Must we, necessarily, treat novelty uniquely as something that, from outside of an economic system, has an influence on it and on its evolution? Is it not a paradox to say that something that has no economic meaning is able to explain economic change? If so, is this paradox present in the Schumpeterian view on development? In this paper, we present what will be called the Schumpeter paradox: denoting nominally ‘novelty’ and ‘creator personality’ as its source, and ‘norm change’ as an analytical tool, is insufficient to separate different fields such as development and growth, if previously (and as a necessary condition) one does not develop a theoretical framework that has a natural place for the elements of ‘novelty’ and ‘creator personality’ that can support such a difference. Nobody should pretend that the study of economic development processes is straightforward. There are good grounds for believing that the innovation ‘black box’ will remain partially closed to economic analysis. However, this does not mean that nothing substantial may be said about novelty and economic development. How to tackle with this topic (and so, with the above-mentioned paradox) will require a change of perspective: a heuristic task should be undertaken. The ‘action plan approach’ here proposed would provide a coherent analytical framework to tackle with this kind of paradox.     

Using Field Experiments to Change the Template of How We Teach Economics

In this article, the author explains why field experiments can improve what we teach and how we teach economics. Economists no longer operate as passive observers of economic phenomena. Instead, they participate actively in the research process by collecting data from field experiments to investigate the economics of everyday life. This change can be shown to students by presenting them with evidence from field experiments. Field experiments related to factor markets, behavioral economics, and discrimination are presented to explain how this approach works across different economic content. The three questions that are highlighted are the following: (1) Why do women get paid less than men in labor markets? (2) How can we use behavioral economics to motivate teachers? (3) What seven words can end third-degree price discrimination?     

State capitalism and the rent-seeking conjecture

The notion that state capitalism (an economic system “in which the state functions as the leading economic actor and uses markets primarily for political gain”) is a new form of capitalism emerging in the global arena has been recently advanced by several authors. This paper explores the problem of the nature of this system in the light of these claims to novelty. What are its main features as described by these authors? Is state capitalism distinctive from other forms of capitalism or other types of economic systems? Are we really witnessing the emergence of a new type of economic system? To address such questions the paper starts by trying to place the model of state capitalism within the traditional comparative economic systems framework. The inconclusive result leads to a different approach in which the concept of rent-seeking society is used to underlie the structural similarities between mercantilism, real life socialism and state capitalism. The article argues that the conjecture that what has been labeled “state capitalism” is yet another form of rent-seeking system is both robust and worth further investigating.     

The interactive effects of human capital and quality of life on economic growth

To bridge the gap in the quality of life (QOL) and economic growth literature and understand the reinforcing effects of QOL and human capital on economic development, we examine the interactive effects of these two factors on wage growth from 2000 to 2007 at the county level across the United States. First, a Rosen–Roback model is employed to estimate implicit values of amenities including climate, clean air and other natural attributes, which are used to generate QOL indices. Second, QOL, human capital represented by the share of college graduates, and their interaction serve as key variables in the wage growth model. An instrumental variable approach and location fixed effects are used to address endogeneity of human capital and control for location-specific unobservable characteristics. Results suggest that human capital and QOL significantly contribute to economic growth and the growth effects are even larger in nonmetropolitan counties. Importantly, we find that the effect of human capital on growth is larger in high-QOL counties and QOL enhances the effect of human capital on growth. Our results provide empirical support for community development strategies through providing utility-enhancing amenities that improve QOL and retain human capital.     

Is economic growth for the birds?

The environment provides ecosystem services that support human wants. Economic growth is important for raising human living standards. But whether economic growth benefits the environment is unclear. Research into this relationship has focused on a U-shaped association known as the Environmental Kuznets Curve (EKC). As economies grow, environmental quality initially declines but ultimately recovers and improves. However, environmental quality has been narrowly defined in the research, largely neglecting the availability and range of ecosystem services. Because these services derive from biodiversity, we use avian biodiversity as a proxy for environmental quality. Our results replace the U-shaped relationship with a lazy-S relationship. As economies grow, environmental quality initially declines, then improves over intermediate growth, but ultimately declines at higher growth. The EKC hypothesis has been used to forward economic growth as a means for improving environment quality. Our results call into question policies that rely solely on economic growth for reversing environmental decline.     

新常态下内需拉动经济增长是否存在有效边界*

新常态下,中国如何维持经济中高速增长既是重点,也是难点。由于外需拉动型经济增长方式逐渐难以为继,扩大内需的重要性日益突出。然而,扩大内需真的是有效国策吗？投资和消费拉动经济增长,是否存在有效边界？基于此,本文通过构建面板门限模型,利用2012-2013年中国275个市级数据,对内需拉动经济增长是否存在有效边界问题进行了实证检验。研究结果显示：投资拉动经济增长确实存在有效边界,当投资率较低时,增加投资能够有效拉动经济增长,当投资率已经较高时,增加投资对经济增长的拉动作用将不再显著;消费拉动经济增长也存在有效边界,当投资效率较低时,增加消费会抑制经济增长,当投资效率足够高时,增加消费才能够有效拉动经济增长。\     

ASIAN FINANCIAL LINKAGE: MACRO‐FINANCE DISSONANCE

How are Asian financial markets interlinked and how are they linked to markets in developed countries? What is the main driver of fluctuations in Asian financial markets as well as real economic activity? To answer these questions, we estimate the spillover index proposed by Diebold and Yilmaz and gauge the degree of interaction in both financial markets and real economic activity among Asian economies. We first show that the degree of the international spillover in stock markets is uniform, irrespective of the groups of countries concerned, such as the G3 and ASEAN4. This suggests the importance of global common shocks in stock markets. We then discuss the macro‐finance dissonance. In stock and bond markets, the United States has been the main driver of fluctuations. However, China has emerged as an important source of fluctuations in real economic activity.     

Channels of transmission of environmental policy to economic growth: A survey of the theory

Economists generally hold that environmental regulations impose constraints on the production possibilities set and are therefore potentially harmful to economic growth. In recent years, however, it has been recognized that environmental regulation can enhance the prospects for growth if improved environmental quality increases the productivity of inputs or the efficiency of the education system. It is also held that environmental regulation promotes pollution abatement activity and can lead to the exploitation of increasing returns to scale in abatement. Furthermore, expectations of a better environment may encourage households to save. Finally, it has been conjectured that environmental regulations can stimulate innovation because R&D is a relatively clean activity and because the market share of clean innovations increases. Future empirical research should shed light on the relative importance of these different channels of transmission of environmental policy to the growth rate of the economy.     

预期寿命延长促进经济增长了吗 ——基于全球121个经济体的实证分析

随着社会进步和生活水平的不断提升,人口预期寿命逐渐延长,全球人口老龄化程度亦不断提高,但这并非意味着人口红利的消失。本文基于1996—2017年121个经济体的面板数据,使用动态面板GMM估计方法分析了预期寿命与经济增长之间的关系。实证研究发现：（1）预期寿命延长对经济增长具有促进作用;（2）纳入收入与预期寿命的交互项后,预期寿命显示出对经济增长的制约作用,而收入水平的提高则中和了这种制约作用,带来经济增长水平的提高;（3）不同性别的预期寿命对经济增长的影响具有异质性。基于此,本文从提高居民可支配收入与提高人力资本水平方面提出了相关的政策建议。     

人工智能对绿色经济增长的作用机制与赋能效果——产业结构优化视角

人工智能作为新一轮科技革命和产业变革的重要抓手,深刻影响着中国绿色发展的路径选择偏向。结合非连续性技术创新理论与中国现实情景,从产业结构优化视角构建人工智能技术赋能绿色增长的逻辑框架,并利用2010—2020年中国省级面板数据检验人工智能的绿色增长效应。结果表明,人工智能通过技术红利效应直接推动绿色经济增长,引入地区高校平均科技产出和《中国制造2025》政策冲击作为工具变量进行内生性修正后,人工智能的绿色增长效应仍显著存在。机制识别揭示,人工智能通过产业结构高级化和合理化驱动绿色经济增长,二者在人工智能绿色增长效应中的相对贡献分别为20.33%和8.35%。异质性分析发现,中国转型经济背景下,人工智能的结构红利在要素市场扭曲程度更低、创新人力资本水平更高、制度环境更完善的地区表现得更为明显,从而可以更充分释放其对绿色增长的赋能效果。拓展性分析发现,人工智能对绿色经济增长具有显著正向空间溢出效应,本地人工智能发展对空间关联地区的绿色发展绩效存在辐射带动作用。聚焦产业结构升级与绿色发展双重视角,可为塑造以人工智能为核心的技术竞争优势、实现经济高质量发展提供理论支撑和经验证据。     

Revisiting growth empirics based on IV panel quantile regression

We analyse the well-known issue of economic growth convergence using quantile regression. Most previous studies have used a least squares (LS) method or variation, which focuses on the issue only at the mean of the growth rate. Therefore, such results cannot provide a satisfactory answer to what can happen if the growth rate is far from the conditional mean level. For example, we consider the following question: do we still have economic growth convergence or is the convergence speed changed in a low growth period such as the ‘Great Recession,’ that started in 2008? We propose using instrumental variable panel quantile regression to answer this question. Our empirical findings demonstrate that economic growth convergence occurs at all quantiles over the entire conditional distribution, but that the convergence speed does depend on quantiles; the convergence speed is much higher when the GDP growth rate is at either high or low quantiles.     

产业集聚与经济增长质量——基于全球82个国家和地区面板数据的实证分析

本文通过五个维度构建了国家层面的经济增长质量指标体系,采用熵值法测算了全球82个国家和地区的经济增长质量指数,并在此基础上实证研究了产业集聚与经济增长质量的关系。研究发现：制造业集聚与服务业集聚水平的提高有助于改善一国的经济增长质量,但两者对经济增长质量的影响渠道有所不同。服务业集聚对经济增长质量的影响在不同类型国家之间存在异质性,即服务业集聚程度的增加能够明显改善非OECD国家和地区的经济增长质量,但对OECD国家和地区的经济增长质量影响不显著。此外,FDI对制造业集聚与一国经济增长质量的关系以及对服务业集聚与一国经济增长质量的关系,分别具有正向调节效应和负向调节效应,而人力资本水平对制造业集聚和服务业集聚与一国经济增长质量的关系均具有正向调节效应。本文的研究结论对于如何制定相关产业政策以推动经济高质量发展具有重要的参考价值。     

The role of innovation and quality change in Japanese economic growth

This paper explores the use of time series data to isolate quality change in the Japanese economy using a hedonic procedure. We argue that the traditional approach to hedonic estimation based upon panel data sets of different brands in a given product area is extremely resource intensive and, thus, unlikely to be adopted by official statistical bodies outside of key areas, such as computers. This paper adopts a “top-down” approach to see whether more traditional measures of technical change, such as patents, can be used to separate pure inflation from quality change. If this is possible, it offers a much simpler route to estimate the role of quality change in economic growth and performance. In practice, we extend the analysis not only to include patents, but other forms of intellectual property that might reflect technology and attribute changes, such as designs, utility models and trademarks. We begin by taking a longer-term historical perspective, exploring the development of indigenous inventive capacity in Japan during the early years when R&D data are not available. It is possible to show that the rise in utility models pre-dates the main growth in patenting activity, suggesting the development in more low-level indigenous creative work prior to higher level inventive activity. The principal aim of this paper, however, is to demonstrate that it is possible to develop robust models to explain changes in the producer price index in Japan, which can then be used to re-examine Japanese growth performance over the period from about 1960. If the official Japanese statistical body has fully accounted for quality change in the price indices (i.e. produced fully quality-constant price deflators), then the official estimates of growth will be correct. However, we provide strong evidence that this is not the case. Changes in quality, proxied by the IP variables, are important determinants of prices in Japan over the period 1960 to 1995 as a whole. Indeed, we provide evidence that the true rate of growth of the Japanese economy, taking into account the rate of quality change, is significantly higher than that suggested in official statistics.     

中国西部地区经济增长质量的评价

改革开放以来,中国西部地区经济发展的成效主要不在干经济增长速度的高低,而在于经济增长质量的优劣,在于经济增长是否使西部地区的人民生活水平得到全面提高。本文从经济增长质量的视角来考察西部地区2004—2008年经济发展状况,通过系统全面的指标体系,用主成份分析法对西部地区的经济增长质量进行综合评价,对改善西部地区现有经济增长方式,提高人民生活质量及进一步推进西部大开发具有重要的理论和现实意义。