Reduce Productivity Growth Research Articles

The effects of climate change on the natural rate of interest: A critical survey

AbstractThis survey reviews the literature about the possible impacts of climate change on the natural rate of interest (r*), an important yardstick for monetary policy. Prima facie, economic, and financial developments can lower r* in scenarios with increasing climate‐related damages and uncertainty that reduce productivity growth and raise precautionary savings. Orderly climate policies have a pivotal role in facilitating the transition to a carbon‐neutral economy and supporting a steady investment flow. We discuss the main models used to simulate the effects of climate change on r* and summarize the outcomes. However, in scenarios that assume innovations and investments induced by transition policies, r* could be affected positively. Overall, the downward effects of climate change on r* can be substantial, even considering the high degree of uncertainty about the outcomes, with tipping points and nonlinear effects aggravating the economic impacts. The downward pressure on r* will further challenge monetary policy in the long run, by limiting its policy space.This article is categorized under: Climate Economics > Economics and Climate Change Assessing Impacts of Climate Change > Evaluating Future Impacts of Climate Change

ЗМІНА КИСЛОТНОГО ТА ПЕРЕКИСНОГО ПОКАЗНИКА ЖИРУ В КОМБІКОРМАХ ПІД ЧАС ЗБЕРІГАННЯ

Інтенсивне управління тваринництвом на промисловій основі вимагає забезпечення повноцінного раціону кормів для поживних речовин і біологічно необхідних компонентів. Кормові ліпіди і змішані ліпідні продукти, наявні на ринку кормових інгредієнтів, значно відрізняються за складом жирних кислот, енергетичним змістом, якістю та ціною. Часто використовувані вимірювання якості ліпідів включають колір, профіль жирної кислоти, зміст вільної жирної кислоти, ступінь ненасиченості або насиченості (йодне число -IV; титр), значення омилення і домішки, включаючи воду, нерозчинні і неозамінні речовини. Ці показники зазвичай використовуються для того, щоб забезпечити, що ліпідні продукти відповідають комерційним умовам, але надають неспецифічну або неспецифічну інформацію про рівень зміни реркісного числа відносну поживну цінність. Результати показують, що склад і якість ліпідів, годуються великою рогатою худобою і птицею, сильно відрізняються. Перекисне окислення ліпідів - це складний і динамічний процес, в якому одночасно утворюються і руйнуються численні з'єднання. Хоча був розроблений і використаний кілька орієнтовних і прогностичних аналізів для вимірювання різних пероксідаційніх з'єднань, не існує єдиного аналізу, який би повністю характеризував ступінь перекисного окислення в усіх ліпідних джерелах. Як результат, важко передбачити можливий негативний вплив перекисного окислення ліпідів на ріст і здоров'я свиней. Хоча деякі дослідники запропонували мінімальні пороги перекису в їжі, призводять до зниження зростання продуктивності праці, загальновизнаних стандартів не встановлено.

Endogenous education and the reversal in the relationship between fertility and economic growth

To reconcile the predictions of research and development (R&D)-based growth theory regarding the impact of population growth on productivity growth with the available empirical evidence, we propose a tractable, continuous-time, multisector, R&D-based growth model with endogenous education and endogenous fertility. As long as the human capital dilution effect is sufficiently weak, faster population growth may lead to faster aggregate human capital accumulation, to faster technological progress, and, thus, to a higher growth rate of productivity. By contrast, when the human capital dilution effect becomes sufficiently strong, faster population growth slows down aggregate human capital accumulation, dampens the rate of technical change, and, thus, reduces productivity growth. Therefore, the model can account for the possibly negative correlation between population growth and productivity growth in R&D-based growth models depending on the strength of the human capital dilution effect.

Macroeconomic Policy Beyond Brexit

Macroeconomic Policy Beyond Brexit

Credit constraints and economic growth in a dual economy

Pervasive credit constraints have been seen as major sources of slow growth in developing economies. This paper clarifies a mechanism through which an inefficient financial system can reduce productivity growth. Using a two-sector model, second, we examine the implications for employment and the distribution of income. Both classical and Keynesian versions of the model are considered; saving decisions are central in the classical version while firms’ investment and pricing decisions take center stage in the Keynesian version. We find that, although boosting the asymptotic rate of growth, a relaxation of credit constraints may reduce the share of the formal sector, increase inequality and underemployment, and have little or no effect on the medium-run rate of growth.

Aggregate uncertainty and sectoral productivity growth: The role of credit constraints

We show that an increase in aggregate uncertainty—measured by stock market volatility—reduces productivity growth more in industries that depend heavily on external finance. The mechanism at play is that during periods of high uncertainty, firms that are credit constrained switch the composition of investment by reducing productivity-enhancing investment—such as on ICT capital—which is more subject to liquidity risks (Aghion et al., 2010). The effect is larger during recessions, when financing constraints are more likely to be binding, than during expansions. Our statistical method—a difference-in-difference approach using productivity growth of 25 industries from 18 advanced economies over the period 1985–2010—mitigates concerns with omitted variable bias and reverse causality. The results are robust to the inclusion of other sources of interaction effects, instrumental variable approaches, and different datasets. The results also hold if economic policy uncertainty (Baker et al., 2016) is used instead of stock market volatility as a measure of aggregate uncertainty.

From Firm Productivity Dynamics to Aggregate Efficiency

I construct a quantitative framework to evaluate how financial constraints can reduce productivity growth at the firm level and result in lower aggregate productivity. I consider a model where firms are able to invest in innovation in order to increase their productivity, or knowledge capital. This investment is a costly and uncertain enterprise. As the capacity to obtain external funds is diminished, resources allocated to this effort will be reduced due to different mechanisms at work. First, the return of this investment in the case of success may be diminished by the inability to quickly increase production capacity if the credit necessary to do so is scarce (i.e., if entrepreneurs cannot rent the optimal level of physical capital). Second, financial constraints reduce profits obtained by entrepreneurs and therefore the amount of assets they are able to accumulate in every period. Finally, financially underdeveloped economies will be characterized by a lower average ability of entrepreneurs. This is due to the lower equilibrium wage in the economy, which results in a larger mass of individuals opting to set up firms. In the margin, these individuals tend to have lower ability to manage a firm and relatively low prospects of generating firm productivity growth through innovation.

Aggregate Uncertainty and Sectoral Productivity Growth: The Role of Credit Constraints

We show that an increase in aggregate uncertainty—measured by stock market volatility—reduces productivity growth more in industries that depend heavily on external finance. This effect is larger during recessions, when financing constraints are more likely to be binding, than during expansions. Our statistical method—a difference-in-difference approach using productivity growth for 25 industries for 18 advanced economies over the period 1985-2010—mitigates concerns with omitted variable bias and reverse causality. The results are robust to the inclusion of other sources of interaction effects, such as financial development (Rajan and Zingales, 1998) and counter-cyclical fiscal policy (Aghion et al., 2014). The results also hold if economic policy uncertainty (Baker et al., 2015) is used instead of stock market volatility as the measure of aggregate uncertainty.

Aggregate Uncertainty and Sectoral Productivity Growth: The Role of Credit Constraints

We show that an increase in aggregate uncertainty—measured by stock market volatility—reduces productivity growth more in industries that depend heavily on external finance. The mechanism at play is that during periods of high uncertainty, firms that are credit constrained switch the composition of investment by reducing productivity-enhancing investment—such as on ICT capital—which is more subject to liquidity risks (Aghion et al., 2010). The effect is larger during recessions, when financing constraints are more likely to be binding, than during expansions. Our statistical method—a difference-in-difference approach using productivity growth of 25 industries from 18 advanced economies over the period 1985-2010—mitigates concerns with omitted variable bias and reverse causality. The results are robust to the inclusion of other sources of interaction effects, instrumental variable approaches, and different datasets. The results also hold if economic policy uncertainty (Baker et al., 2016) is used instead of stock market volatility as a measure of aggregate uncertainty.

Will ‘structural reforms’ of labour markets reduce productivity growth? A firm-level investigation

More ‘flexible’ labour relations significantly reduce labour productivity growth in sectors that tend towards a ‘routinised’ (other than a ‘garage business’) innovation regime. We argue that structural reforms that make firing easier will diminish the loyalty and commitment of workers, making accumulation of (tacit) knowledge more difficult. It also reduces training, increases knowledge-leaking to competitors and favours autocratic management and the growth of management and control bureaucracies. Our results are consistent with findings in macro-level studies that wage-cost saving flexibilisation of labour relations and downward wage flexibility reduce labour productivity growth: a 1 per cent wage change causes a ≈ 0.4 per cent change in value added per labour hour.

Climate Shocks and (Very) Long-Run Productivity

The present study examines the link between temperature and long-run productivity for a balanced panel of 21 countries, covering the period 1000-1800 CE. Collectively the countries examined accounted for about 2/3 of the global population by 1700. Each epoch in the analysis is a century long, which thus allows time for human adaptation after a temperature shock has occurred. Our principal finding is that lower temperatures worked to reduce productivity growth during the period in focus, consistent with contributions to the literature in economic history that argue the Little Ice Age was as a contractionary shock.

Bank ownership, lending, and local economic performance during the 2008–2009 financial crisis

Although government banks are frequently associated with political capture and resource misallocation, they may be well-positioned during times of crisis to provide counter-cyclical support. Following the collapse of Lehman Brothers in September 2008, Brazil׳s government banks substantially increased lending. Localities in Brazil with a high share of government banks received more loans and experienced better employment outcomes relative to localities with a low share of government banks. While increased government bank lending mitigated an economic downturn, we find that this lending was politically targeted, inefficiently allocated, and reduced productivity growth.

Productivity Growth and Income Inequality

This paper employs cross country regression analysis to consider the relationship between real labor productivity growth over the first decade of the twenty-first century and income inequality. It postulates that, under the assumption that most countries in the world exceed the optimal level of income inequality, greater income inequality leads to reduced productivity growth. The empirical results of the paper are consistent with the notion that real labor productivity growth is negatively related to income inequality. The investigation of the sources of productivity growth is an important task. Productivity growth is the foundation for economic growth and provides the basic undergirding for the improvement of the standard of living. If human beings can correctly identify the factors behind productivity growth and the way in which they operate, then it places them in a position to be able to consciously conduct policy to increase productivity growth. One key potential determinant of productivity growth is the degree of income inequality in society. This paper looks empirically at a possible relationship between productivity growth and income inequality and tests the hypothesis, under the assumption that countries in the world have surpassed the optimal level of inequality, that there is a negative relationship between productivity growth and income inequality.

The Economic Contribution of High-Growth Firms: Do Policy Implications Depend on the Choice of Growth Indicator?

Prior studies have defined high-growth firms (HGFs) in terms of growth in firm employment or firm sales, and primarily analyzed their contribution to overall employment growth. In this paper we define HGFs using the commonly applied growth indicators (employment and sales), but also add definitions based on growth in value added and productivity. Our results indicate that HGFs in terms of employment are not the same firms as HGFs in terms of productivity, and that their economic contributions differ significantly. Economic policy promoting fast growth in employment may therefore come at the cost of reduced productivity growth. Although HGFs of different definitions may not be the same firms, young firms are more likely to be HGFs irrespective of definition. This suggests that economic policy should focus on the conditions for new firm formation and early growth of firms, rather than target a particular type of HGFs.

Reallocation and restructuring: A generalization of the Balassa–Samuelson effect

Despite its strong theoretical position when it comes to explaining inflation in transition economies, the empirical findings of the Balassa–Samuelson (B–S) effect assign only a minor role to structural inflation – to the disappointment of analysts and policymakers. This article points to 3 theory-based contributing factors to these ‘weak’ findings and offers an alternative methodological approach. First, a short-term focus makes B–S prone to underestimating the magnitude of the productivity growth differential. Second, the conventional demand side CPI based definition of sectoral value added reduces the extent to which the productivity growth differential is passed through to inflation. Third, by ignoring the dependence between the 2 main B–S components, a further downward bias to the productivity growth pass through comes about. The key to our proposed alternative methodology centres on an endogenous relation between the productivity growth differential and sector sizes. Together with the long-run supply-side approach this allows us to capture inflation drivers that conventional B–S fails to incorporate. In our extension to the conventional B–S model a reduced productivity growth differential can be compensated by an increased productivity growth pass-through, or vice versa – with the effect of augmenting inflation pressure. Hence, the link between productivity growth differentials and the dynamics of structural inflation is shown to be more complex than previously assumed.

Does Public Policy Matter for Labor Productivity Growth?: A Political-Economic Analysis of Productivity Effects of Policy in OECD Countries

Labor productivity - output per hour worked - is an important factor determining the wealth of national economies and their standards of living. Its growth accounts for about half of per capita GDP growth in OECD countries. Despite its importance, it has received scant attention in political science. This paper seeks to fill a gap in the study of the productivity effects of government policy. I provide an explanation from the perspective of human capital investments, where governments can help promote human capital investments by individuals (1) by reducing the costs of investments and thereby increasing their net benefits by using public education, redistribution, welfare, and labor market policy and (2) by creating a social environment (with policies and institutions) where human capital investments pay and individuals believe it. The main empirical findings are the following. Family support policy boosts productivity growth. So does public education, particularly university education. However, at least when measured by public spending levels, active labor market policy (ALMP) suppresses productivity growth. The nature and quality of ALMP may matter more than spending. Meanwhile, although market poverty and income inequality are found to reduce productivity growth and thus redistribution would be expected to promote it, pro-productivity effects of redistribution are not detected, when it is measured simply as reductions in poverty and inequality after taxes/transfers. Redistribution through the provision of public services such as family support and education may be better for productivity growth. Finally, social democratic governments facilitate productivity growth, over and above the effects of their hallmark policy and institutional variables.

Special-interest groups and growth

This paper explores empirically the relation between special-interest groups and economic growth. Our analysis exploits new data on the number of groups observed across countries and time, in order to mitigate the identification problems associated with earlier studies. Also in contrast to earlier work, we examine the impact of groups on two sources of growth - capital accumulation and technological change - in addition to the impact of groups on output growth. The findings are consistent with Olson's (1982) claim that societies with greater numbers of interest groups grow slower, accumulate less capital, and experience reduced productivity growth relative to others.

Special-Interest Groups and Growth

This paper explores empirically the relation between special-interest groups and economic growth. Our analysis exploits new data on the number of groups observed across countries and time, in order to mitigate the identification problems associated with earlier studies. Also in contrast to earlier work, we examine the impact of groups on two sources of growth - capital accumulation and technological change - in addition to the impact of groups on output growth. The findings are consistent with Olson's (1982) claim that societies with greater numbers of interest groups grow slower, accumulate less capital, and experience reduced productivity growth relative to others.

The impact of trade liberalization on employment, capital, and productivity dynamics: evidence from the uruguayan manufacturing sector

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan Manufacturing Sector. Higher international exposure implied a slightly higher job creation, an important increase in job and capital destruction, and an increase in productivity. Unions dampened these effects. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction but they also reduced productivity growth. Industry concentration mitigated the destruction of jobs but had no effects on job creation or in capital and productivity dynamics.

Competition, agency and productivity

This article tests a set of hypotheses relating to agency and Schumpeterian views on how competition affects performance. A survey data set of Australian workplaces is used, with the change in labour productivity as the dependent variable. The results show strong support for the idea that intense competition raises productivity growth in managerial workplaces, but not in non‐managerial workplaces (i.e. where the principal owner also works). Testing the agency theories in more detail, we find no evidence that the number of competitors, the price elasticity of demand or a proxy for bankruptcy (pre‐tax losses) are the mechanisms behind the process. For non‐managerial workplaces the results indicate support for the idea that greater demand uncertainty reduces productivity growth. In contrast, for managerial workplaces, greater demand uncertainty tends to raise productivity growth.