Environmental tax policy in a model of growth cycles

Summary. The purpose of this paper is to consider environmental taxation which would control emissions of firms in a model of growth cycles. In the model presented below, the economy may experience two phases of growth and environmental quality: “the no-innovation growth regime” and “the innovation-led growth regime”. Aggregate capital and environmental quality remain constant in the no-innovation growth regime, while they perpetually increase in the innovation-led growth regime. The paper shows that the tax plays a key role in determining whether the economy stably converges to one of the two regimes or fluctuates permanently between them. It also shows that there is a critical level of the tax and that the economy obtains higher growth rates of capital and environmental quality by raising (or reducing) the tax if the initial tax is below (or above) the critical level. Received: April 2, 2001; revised version: March 21, 2002 RID="*" ID="*" This research reported here was conducted within the research project “Project on Intergenerational Equity” at Institute of Economic Research, Hitotsubashi University. I am deeply grateful to an anonymous referee for his or her insightful comments, which greatly improved the paper. I also thank Hiroshi Honda, Yasuo Maeda, Yuji Nakayama, and participants in workshops at Hitotsubashi University, Kyoto University, Nagoya University, Osaka University, University of Tsukuba, Yokohama National University, and University of Tokyo for their valuable comments and suggestions. Any remaining errors are mine.     

Schumpeterian cycles with pro-cyclical R&D

Recent empirical work finds that R&D expenditures are quite pro-cyclical even for firms that are not credit-constrained during downturns. This has been taken as strong evidence against Schumpeterian-style theories of business cycles that emphasize the idea that downturns in production may be good times to allocate labor towards innovative activities. Here we argue that the pro-cyclicality of R&D investment is in fact quite consistent with at least one of these theories. In our analysis we emphasize three key features of R&D investment relative to other types of innovative activity: (1) it uses knowledge intensively, (2) it is a long-term investment with uncertain applications, and (3) it suffers from diminishing returns over time.     

Efficiency, depth and growth: Quantitative implications of finance and growth theory

We develop a parsimonious finance and endogenous growth model with microeconomic frictions in entrepreneurship and a role for credit constraints. We demonstrate that though an efficiency–growth relation will always exist, the efficiency–depth–growth relation may not. This has implications for the connection between the theory and empirics of finance and growth. We go on to ask whether the model can account for some historical trends in growth, financial depth and financial efficiency for the UK over the period 1850–1913. The best model of finance and growth is one that departs from the standard depth–growth link.     

Business cycles in a two-sector model of endogenous growth

Summary. This paper analyzes the impact of cyclical volatility on long-term economic growth: does growth increase or decrease with increased cyclical volatility? We construct a stochastic two-sector model of endogenous growth to analyze this question in detail. We will show that economic growth is higher in the presence of business cycles, since people devote more time to learning activities in an uncertain economic environment. Human capital is a hedge against future income uncertainty. Hence, the rate of economic growth will be higher in a stochastic environment. Based on a calibration of the model, we find that economic growth increases by 0.46%-point as a result of observed business cycle variability. When account is taken of the interaction between the model's general equilibrium and the cycle, welfare gains (measured in units of a permanent percentage increase in consumption) from eliminating business cycle volatility are approximately 1.87%. Received: January 25, 2000; revised version: November 3, 2000     

The foundations of trust: macro and micro

This comment on Beugelsdijk's (2006) critique of trust and itsmeasurement argues that it misses the mark, and that there isneither a theoretical nor an empirical foundation for thinkingthat the macro and micro foundations of trust or its measurementare different from each other. Generalised trust is more thana simple illusion hiding behind institutional structures.     

Financial intermediation and growth: causality and causes without outliers

In a seminal paper, Levine et al. (J Monet Econ 46:31–77, 2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.

Patterns of technology life cycles: stochastic analysis based on patent citations

Patent analysis has been considered as an effective means of estimating phases of a technology life cycle. However, previous studies have not considered the dynamic and idiosyncratic aspects of a technology’s progression since they were based on deterministic methods, mainly fitting s- or double s-shaped curves to patent application counts. Moreover, previous methods cannot be executed at the individual patent level. We propose a stochastic technology life cycle analysis to trace the phases of a technology’s progression based on patent citations and identify the patterns of technology life cycles at the individual patent level. At the heart of the proposed approach are a hidden Markov model to estimate the probability of a system being at a certain hidden state from observation and cluster analysis to group a set of objects according to their similarities. A case study of patents about laser technology in lithography is presented.     

Business cycles and productivity growth: Are temporary downturns productive or wasteful?

This paper investigates the relationship between the structure of the business cycle and total factor productivity (TFP) growth in U.S. manufacturing. Previous empirical studies on cycle-growth interactions have been conducted at the aggregate level, and have produced mixed results. In contrast, we examine the dynamic linkages between temporary employment shocks and TFP at the industry level, using the NBER Productivity Database. Given the substantial differences in factor intensities, costs and the nature of innovation and productivity-enhancing activities across industries, there are good reasons why cycle-growth interactions may be more readily captured at the sectoral level. We construct an exactly identified Vector Autoregressive model for employment and TFP growth, and find strong support for the “opportunity-cost” view of business cycle-productivity growth interaction. This result suggests that recessions can lead to TFP growth through reorganization and restructuring effects. On the other hand, we find little support for the notion that temporary booms increase TFP through “learning-by-doing” effects. The responsiveness of TFP to employment shocks also seems to be related to the degree of job reallocation within individual industries and the capital intensity of the industry in question. This is further evidence in favour of the view that employment shocks can trigger reorganization effects. Finally, we suggest possible future avenues for this research, including the adjustment of TFP measures to allow for variable factor utilization over the cycle.     

中国经济增长的特征、可持续性与潜在增长率估算:一个综述

在本文通过对中国经济增长的表现特征、可持续性和潜在增长率估算三方面的理论综述,进一步论述了中国经济增长的发展脉络,并在此基础上提出研究中国经济增长理论尚需改进的空间.     

Financial intermediation,consumption dynamics,and business cycles

The recent financial crisis highlighted the need to deepen our understanding of the impact of the financial intermediation sector on the real economy. We examine the quantitative implications of financial intermediation and firm's financing frictions in explaining the observed cyclical properties of both real and financial variables. We find that a modified version of the financial intermediation framework of Gertler and Karadi (2011) augmented with financing frictions in production does a good job in matching the unconditional moments of financial fluctuations without compromising key real co-movements. Our results are relevant for macro-prudential policy analysis as they underscore the importance of carefully identifying the sources of aggregate fluctuations in models in which financial intermediaries and financial frictions play a non-trivial role.     

Economic growth and sector dynamics

This paper analyzes the endogenous determination of sectors in a growing economy. It assumes that there are traditional sectors and modern sectors and economic growth is driven by rising productivity of the modern sectors. It also assumes that individuals are heterogeneous, which leads to increasing marginal opportunity costs in creating new modern sectors. We show that under these main assumptions, economic growth first increases diversification to sectors and then reduces it. We also show that for the equilibrium to be stable and well-behaved, it is required that the modern and traditional sectors should be substitutes and not complements.     

Volatility,growth and cycles

The paper investigates the factors affecting the equilibrium level of output in a panel of European countries. Output depends on factor inputs and on the technology and the efficiency with which those factors are used. Efficiency may be driven by international conditions and institutional changes such as the Single Market Programme in Europe. The technology indicators used in this study depend upon research and development and also include the level of labour efficiency which is indexed on skills data. The level of the capital stock depends upon the user cost of capital, which may depend upon risk and hence on the volatility of the economy. Recent literature suggests that real exchange rate volatility is important in determining investment and therefore has an impact on equilibrium output. A link of this form is uncovered for the European economies. If policy can reduce these volatilities then it can also raise equilibrium output.

The dynamics of financial development,globalisation, economic growth and life expectancy in sub‐Saharan Africa

The importance of life expectancy is recognised in the development economics literature because of its increasing effects on labour productivity and economic growth in long‐run. However, no published study to date empirically examines the nonlinear relationships between globalisation, financial development, economic growth and life expectancy in sub‐Saharan African (SSA) countries. Therefore, our study intends to fill this gap by using non‐parametric cointegration test and multivariate Granger causality test towards a non‐linear empirical understanding of the factors affecting the life expectancy. We consider the case of 16 sub‐Saharan African economies using annual data over the period 1970–2012. The empirical analysis indicates that financial development, globalisation and economic growth appear to have a positive impact upon life expectancy in sub‐Saharan African economies, except for Gabon and Togo. Our empirical findings may provide insightful policy implications towards improving population health conditions which are vital for promoting the productivity of labour force and long‐run economic growth in sub‐Saharan African countries. In light of these policy implications, governments should incorporate globalisation, financial development and economic growth as key economic instruments in formulating sustainable developmental policy to promote life expectancy for the people in sub‐Saharan African countries.     

Economic freedom, civil liberties, political rights and growth: a causality analysis

Several empirical studies have established the relationship between economic freedom, civil liberties and political rights, and economic growth. Nevertheless, few studies analyze the directions of causality. This paper studies the causality relations between the institutional dimensions mentioned above and economic growth, as well as the interrelations between them, using the Granger methodology with panel data for 187 countries and five-yearly observations for the period 1976–2000. In addition, the relations between these freedoms and investment in physical and human capital are examined, to be able to isolate the direct and indirect effects on growth. The authors acknowledge the suggestions made by the editor and the reviewers, which have improved this work with respect to its initial version.     

Dollarization, economic growth, and employment

Dollarization brought price stability and higher economic growth to Ecuador. Nevertheless, unemployment remained stubbornly high. Two opposing forces explain this result: sustained growth led to higher labor demand but price stabilization triggered substitution effects by cheaper intermediate goods and capital.     

Population,food, and knowledge: a simple unified growth theory

This paper provides a unified growth theory, i.e. a model that explains the very long-run economic and demographic development path of industrialized economies, stretching from the pre-industrial era to the present-day and beyond. Making strict use of Malthus’ (An essay on the principle of population. London, printed for J. Johnson, 1798) so-called preventive check hypothesis—that fertility rates vary inversely with the price of food—the current study offers a new and straightforward explanation for the demographic transition and the break with the Malthusian era. Employing a two-sector framework with agriculture and industry, we demonstrate how fertility responds differently to productivity and income growth, depending on whether it emerges in agriculture or industry. Agricultural productivity and income growth makes food goods, and therefore children, relatively less expensive. Industrial productivity and income growth, on the other hand, makes food goods, and therefore children, relatively more expensive. The present framework lends support to existing unified growth theories and is well in tune with historical evidence about structural transformation.      

Asymmetric information, financial intermediation, and business cycles

Summary. This incorporates a debt contracting problem with asymmetric information into a standard monetary business cycle model. The model incorporates a limited participation assumption in order to induce a liquidity effect of monetary shocks and propagate monetary disturbances. The model economy shows that a positive money supply shock generates a decrease in nominal interest rates and an increase in output level. Asymmetric information amplifies the response of capital to the money supply shock, but does not propagate them in other ways. When the monetary shock is an innovation in reserve requirements, it induces a persistent response of the economy. Received: March 20, 1998; revised version: 1 April 1998     

Welfare rules,business cycles,and employment dynamics among lone parents in Norway

How lone parents combine work and welfare in earning a living has long inspired discussion. Yet little is known of their actual labor market attachment, either over calendar time or during individual lifetimes. In this article we address both issues, first by studying Norwegian Labor Force Surveys to illuminate the labor force participation of lone parents during the last two decades and by comparing the trends revealed with similar developments among married and cohabiting parents. Next, we analyze individual labor market transitions, using longitudinal data from administrative registers. The analyses demonstrate large differences in the labor market behaviors of single and nonsingle parents in Norway, even when controlling for differences in human capital and care responsibilities. Shifting labor demand and welfare reforms that prioritize paid work have both affected the employment of lone parents, but favorable economic conditions seem to have played a larger role than stringent social policies in increasing their employment activity.     

Reliving the 1950s: the big push, poverty traps, and takeoffs in economic development

The classic narrative of economic development—poor countries are caught in poverty traps, out of which they need a Big Push involving increased investment, leading to a takeoff in per capita income—has been very influential in foreign aid debates since the 1950s. This was the original justification for foreign aid. The narrative lost credibility for a while but has made a big comeback in the new millennium. Once again it is invoked as a rationale for large foreign aid programs. This paper applies very simple tests to the various elements of the narrative. Evidence to support the narrative is scarce. Poverty traps in the sense of zero growth for low-income countries are rejected by the data in the whole period 1950–2001 and for most sub-periods. The poorest quintile also does not have significant negative growth of the relative income ratio to the world’s richest country over 1950–2001, nor is relative growth for the lowest quintile significantly different than other quintiles. The claim that “well-governed poor nations” are caught in poverty traps is rejected by simple regressions that control for both initial income and quality of government (instrumenting for the latter). The idea of the takeoff also does not garner much support in the data. Takeoffs are rare in the data, most plausibly limited to the Asian success stories. Even then, the takeoffs are not associated with aid, investment, or education spending as the standard narrative would imply.     

产业政策对企业绩效的影响及作用机制研究——来自中国光伏产业的经验数据

选取2009—2019年60家沪深上市光伏企业面板数据,以2009—2019年我国部委及以上部门颁布的243条光伏产业政策为研究对象,运用Stata15构建固定效应模型,检验产业政策对企业创新绩效和经济绩效的影响及其在不同区域创新环境和企业性质下的差异。结果表明,产业政策能够有效促进企业创新绩效提升,但会抑制企业经济绩效提升;企业经济绩效在光伏产业政策与企业创新绩效间发挥部分中介效应,其中在国有企业中表现为抑制作用,在非国有企业中表现为促进作用;区域创新环境在产业政策作用于企业创新绩效过程中起抑制作用。进一步区分企业所有制后发现,在光伏产业政策影响下,国有企业创新绩效不受区域创新环境影响,非国有企业创新绩效受到区域创新环境的负面影响;区域创新环境能够促进非国有企业经济绩效提升,但对国有企业经济绩效没有影响。研究结论可为我国政府合理制定光伏产业政策及光伏企业提高创新绩效提供启示。