Found 1693 article(s) in category 'Q1: Economic Growth'

Smart Development Banks

Smart Development Banks. Ricardo Hausmann, 2019, Paper, “The conventional paradigm about development banks is that these institutions exist to target well-identified market failures. However, market failures are not directly observable and can only be ascertained with a suitable learning process. Hence, the question is how do the policymakers know what activities should be promoted, how do they learn about the obstacles to the creation of new activities? Rather than assuming that the government has arrived at the right list of market failures and uses development banks to close some well-identified market gaps, we suggest that development banks can be in charge of identifying these market failures through their loan-screening and lending activities to guide their operations and provide critical inputs for the design of productive development policies. In fact, they can also identify government failures that stand in the way of development and call for needed public inputs. This intelligence role of development banks is similar to the role that modern theories of financial intermediation assign to banks as institutions with a comparative advantage in producing and processing information. However, while private banks focus on information on private returns, development banks would potentially produce and organize information about social returns.Link

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To Serve the People: Income, Region and Citizen Attitudes towards Governance in China (2003–2016)

To Serve the People: Income, Region and Citizen Attitudes towards Governance in China (2003–2016). Edward Cunningham, Anthony Saich, April 11, 2019, Paper, “Through use of a unique, multi-year public opinion survey, this paper seeks to measure changes in self-reported governmental satisfaction among Chinese citizens between 2003 and 2016. Despite the persistence of vast socio-economic and regional inequalities, we find evidence that low-income citizens and residents living in China’s less-developed inland provinces have actually reported comparatively greater increases in satisfaction since 2003. These results, which we term the “income effect” and “region effect” respectively, are more pronounced at the county and township levels of government, which are most responsible for public service provision. Our findings also show that the satisfaction gap between privileged and more marginalized populations in China is beginning to close, in large part owing to efforts by the Hu Jintao and Xi Jinping administrations to rebalance the gains of economic growth and shift resources towards the populations most overlooked during China’s first few decades of reform.Link

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Peaceful Coexistence 2.0

Peaceful Coexistence 2.0. Dani Rodrik, April 10, 2019, Opinion, “Today’s Sino-American impasse is rooted in “hyper-globalism,” under which countries must open their economies to foreign companies, regardless of the consequences for their growth strategies or social models. But a global trade regime that cannot accommodate the world’s largest trading economy is a regime in urgent need of repair.Link

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The Effect of Payment Choices on Online Retail: Evidence from the 2016 Indian Demonetization

The Effect of Payment Choices on Online Retail: Evidence from the 2016 Indian Demonetization. Antonio Moreno, Donald Ngwe, April 5, 2019, Paper, “The Indian banknote demonetization in 2016 was one of the most significant international events of that year. Overnight, 86 percent of Indian currency in circulation was declared invalid unless exchanged for new bills. The sudden and unexpected demonetization constituted a large shock to the entire Indian economy. One effect of the ensuing cash shortage was a large and sustained increase in the adoption and usage of digital payments. We use detailed sales data consisting of more than two and a half million transactions from a leading Indian online retailer to empirically investigate the effects of payment digitization on the online retail industry. We take advantage of the demonetization as a source of exogenous variation that induced a subset of consumers to switch to digital payments from more commonly used cash-on-delivery payments. We show that consumers who switch to digital payments maintain their purchase frequency but spend more and are less likely to return their purchases. Our findings show that firms in emerging markets may enjoy gains from consumer demand in addition to operational gains resulting from payment digitization.LInk

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Recent U.S. Economic Performance and Prospects for Future Growth

Recent U.S. Economic Performance and Prospects for Future Growth. Dale Jorgenson, April 2, 2019, Paper, “The sharp slowdown of U.S. productivity growth since the Great Recession in 2008 has been widely noted and there is a vigorous debate about the causes of the slowdown and the outlook for future economic growth1. Growth in the medium term will be driven by growth in capital, total factor productivity and revival of participation rates with a smaller role for improvements in educational attainment. Jorgenson et al. (2017), for example, give a 10-year projection of 1.8% per year for GDP growth, derived from a 0.50 percentage point contribution of hours growth, 0.45 points from TFP, 0.76 from capital deepening, and only 0.12 from labor quality growth. Fernald (2016) gives a similar projection of 0.55 points for hours growth and 1.1 points for labor productivity growth. Our overall conclusion is that educational attainment will play a diminished role in future U.S. economic growth.Link

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Disaster Probability and Options-Pricing with Disaster Risk

Disaster Probability and Options-Pricing with Disaster Risk. Robert Barro, April 2019, Paper, “We derive a new option-pricing formula from recursive preference and estimate disaster probability from option prices. The new options-pricing formula applies to far-out-of-the money put options on the stock market when disaster risk dominates, the size distribution of disasters follows a power law, and the economy has a representative agent with Epstein-Zin utility. The formula conforms with data on put-options prices for the U.S. S&P index from 1983 to 2018 and for analogous indices for other countries starting in the mid-1990s. The estimated disaster probability, inferred from monthly fixed effects, is highly correlated across countries and peaks during the financial crisis of 2008-09. The estimated disaster probability forecasts downside risk in the economy. Using quantile regressions, we find that the disaster probability forecasts growth vulnerabilities, defined GDP and Industrial Production growth at the lowest decile.Link

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Innovation, competition and sectoral evolution: an introduction to the special section on Industrial Dynamics

Innovation, competition and sectoral evolution: an introduction to the special section on Industrial Dynamics. Gary Pisano, March 29, 2019, Paper, “This paper is the introduction to the ICC special section on Industrial Dynamics. Industrial dynamics has a venerable heritage in economics and after a long dormant period, it has witnessed a major resurgence beginning in the early 1980s. The current Special Section takes stock of the progress along this new and rich intellectual journey. This Introduction does not aim to present a review of the accomplishments reached in the last period. Rather, it reflects on the broad themes characterizing our progress in understanding industry evolution and industrial dynamics.Link

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Ricardo Hausmann on Venezuela, Inequality in Productivity, and Policy Lessons for International Development

Ricardo Hausmann on Venezuela, Inequality in Productivity, and Policy Lessons for International Development March 2019. GrowthPolicy’s Devjani Roy interviewed Ricardo Hausmann, Professor of the Practice of Economic Development at Harvard Kennedy School and Director of the Center for International Development at Harvard University, on Venezuela, inequality in productivity, and policy lessons for international development. | […]

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Humanitarian Markets

Humanitarian Markets. Ricardo Hausmann, March 25, 2019, Opinion, “The role of humanitarian assistance is like that of a car battery: it gets the cylinders moving until the sequence of internal explosions in the engine recharges the battery and makes the process self-sustaining. That task is made easier by using, rather than replacing, markets.Link

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