Global Economic Growth

Speeches/Talks (2017)

Endogenous Capital- and Labor-Augmenting Technical Change in the Neoclassical Growth Model

Speeches/Talks (2017)

A Note on the Characterization of the Neoclassical Production Function

in Macroeconomic Dynamics (2016)

We study production functions with capital and labor as arguments that exhibit positive, yet diminishing marginal products and constant returns to scale. We show that such functions satisfy the Inada ... [more ▼]

We study production functions with capital and labor as arguments that exhibit positive, yet diminishing marginal products and constant returns to scale. We show that such functions satisfy the Inada conditions if i) both inputs are essential and ii) an unbounded quantity of either input leads to unbounded output. This allows for an alternative characterization of the neoclassical production function that altogether dispenses with the Inada conditions. While this proposition generalizes to the case of n > 2 factors of production its converse does not hold: 2n Inada conditions do not imply that each factor is essential. [less ▲]

Capital- and Labor-Saving Technical Change in an Aging Economy

in International Economic Review (2016)

Does population aging and the associated increase in the old-age dependency ratio affect economic growth ? The answer is given in a novel analytical framework that allows for population aging to affect ... [more ▼]

Does population aging and the associated increase in the old-age dependency ratio affect economic growth ? The answer is given in a novel analytical framework that allows for population aging to affect endogenous capital- and labor-saving technical change. In steady state capital-saving technical progress vanishes, and the economy’s growth rate of per-capita variables reflects only labor-saving technical change. The mere possibility of capital-saving technical change is shown to imply that the economy’s steady-state growth rate becomes independent of its age structure: neither a higher life-expectancy nor a decline in fertility affects economic growth in the long run. [less ▲]

Wirtschaftswachstum!? - Die Geschichte der Weltwirtschaft in 6 Folien

Speeches/Talks (2016)

Endogenous Factor Income Distribution - When Piketty meets Romer -

E-print/Working paper (2016)

We scrutinize Thomas Piketty’s (2014) theory concerning the relationship between an economy’s long-run growth rate, its capital-income ratio, and its factor income distribution put forth in his recent ... [more ▼]

We scrutinize Thomas Piketty’s (2014) theory concerning the relationship between an economy’s long-run growth rate, its capital-income ratio, and its factor income distribution put forth in his recent book Capital in the Twenty-First Century. We find that a smaller long-run growth rate may be associated with a smaller capital-income ratio. Hence, the key implication of Piketty’s Second Fundamental Law of Capitalism does not hold. In line with Piketty’s theory a smaller long-run growth rate may go together with a greater capital share. However, the mechanics behind this result are the opposite of what Piketty suggests. Our findings obtain in variants of Romer’s (1990) seminal model of endogenous technological change. Here, both the economy’s savings rate and its growth rate are endogenous variables whereas in Piketty’s theory they are both exogenous parameters. Including demographic growth in the spirit of Jones (1995) shows that a smaller growth rate of the economy may imply a lower capital share contradicting a central claim in Piketty’s book. [less ▲]

Episteconomie: D’Wirtschaftsgeschicht - Lektionen aus der Geschicht vir d’Wirtschaft (Economic History – Lessons of History for the Economy), Radio 100,7 - Luxembourg,

Diverse speeches and writings (2016)

Population Aging and Innovation: Do Old Societies Think New Ideas?

Presentation (2015, June)

This research advances the hypothesis that at the individual level "old people think old ideas" whereas at the aggregate level "old societies think new ideas." More precisely, we empirically establish the ... [more ▼]

This research advances the hypothesis that at the individual level "old people think old ideas" whereas at the aggregate level "old societies think new ideas." More precisely, we empirically establish the following three hypotheses: i) population aging has a hump-shaped effect on innovation, ii) old societies foster new ideas, and iii) the effect of population aging on innovation operates partly through a favorable attitude towards new ideas and creativity. Our results falsify the often encountered vision according to which old societies have old ideas. Moreover, they emphasize that innovation activity in aging societies is in part driven by cultural attitudes. [less ▲]

Population Aging and Innovation: Do Old Societies Think New Ideas?

Scientific Conference (2015, March)

This research advances the hypothesis that at the individual level "old people think old ideas" whereas at the aggregate level "old societies think new ideas." More precisely, we empirically establish the ... [more ▼]

This research advances the hypothesis that at the individual level "old people think old ideas" whereas at the aggregate level "old societies think new ideas." More precisely, we empirically establish the following three hypotheses: i) population aging has a hump-shaped effect on innovation, ii) old societies foster new ideas, and iii) the effect of population aging on innovation operates partly through a favorable attitude towards new ideas and creativity. Our results falsify the often encountered vision according to which old societies have old ideas. Moreover, they emphasize that innovation activity in aging societies is in part driven by cultural attitudes. [less ▲]

Endogenous Capital- and Labor-Augmenting Technical Change in the Neoclassical Growth Model

Presentation (2015)

The determinants of the direction of technical change and their implications for economic growth and economic policy are studied in the one-sector neoclassical growth model of Ramsey, Cass, and Koopmans ... [more ▼]

The determinants of the direction of technical change and their implications for economic growth and economic policy are studied in the one-sector neoclassical growth model of Ramsey, Cass, and Koopmans extended to allow for endogenous capital- and labor-augmenting technical change. We develop a novel micro-foundation for the competitive production sector that rests on the idea that the fabrication of output requires tasks to be performed by capital and labor. Firms may engage in innovation investments that increase the productivity of capital and labor in the performance of their respective tasks. These investments are associated with new technological knowledge that accumulates over time and sustains long-run growth. We show that the equilibrium allocation is not Pareto-efficient since both forms of technical change give rise to an inter-temporal knowledge externality. An appropriate policy of investment subsidies may implement the efficient allocation. [less ▲]