scholarly journals EXPLORING CROSS-COUNTRY VARIATION IN GOVERNMENT SHARES: WHAT CAN WE LEARN FROM RELATIVE PRODUCTIVITIES?

2012 ◽  
Vol 17 (2) ◽  
pp. 356-372 ◽  
Author(s):  
Maksym Obrizan
Keyword(s):  
Relative Price ◽  
Total Output ◽  
Government Consumption ◽  
Strong Negative Correlation ◽  
Empirical Observation ◽  
Relative Prices ◽  
Neoclassical Growth Model ◽  
Poor Countries ◽  
Cross Country ◽  
Neoclassical Growth

Government shares in total output are characterized by significant variation across countries. I noticed a strong negative correlation between government consumption shares and the price of government services in terms of private consumption. Motivated by this empirical observation, I developed a neoclassical growth model with added government that is capable of matching the variation in government shares very closely using only relative prices. In addition, I provide empirical evidence showing that the relative price of government consumption increases with income, which is consistent with distortions prevailing in poor countries. These two observations combined imply that government shares tend to be higher in poorer countries.

scholarly journals Relative Prices and Relative Prosperity

2007 ◽  
Vol 97 (3) ◽  
pp. 562-585 ◽  
Author(s):  
Chang-Tai Hsieh ◽  
Peter J Klenow
Keyword(s):  
Real Income ◽  
Relative Price ◽  
Relative Prices ◽  
Income Levels ◽  
Poor Countries ◽  
Investment Rates ◽  
Tariff Rates ◽  
Low Efficiency ◽  
Investment Goods ◽  
Real Investment

The positive correlation between real investment rates and real income levels across countries is driven largely by differences in the price of investment relative to output. The high relative price of investment in poor countries is due to the low price of consumption goods in those countries. Investment prices are no higher in poor countries. Thus, the low real investment rates in poor countries are not driven by high tax or tariff rates on investment. Poor countries, instead, appear to be plagued by low efficiency in producing investment goods and in producing consumer goods to trade for them. (JEL E22, E23, O16, O47)

scholarly journals An Exploration of Technology Diffusion

2010 ◽  
Vol 100 (5) ◽  
pp. 2031-2059 ◽  
Author(s):  
Diego Comin ◽  
Bart Hobijn
Keyword(s):  
Technology Diffusion ◽  
Aggregate Level ◽  
Substantial Variation ◽  
Income Differences ◽  
Neoclassical Growth Model ◽  
Per Capita ◽  
Cross Country ◽  
Using Data ◽  
The One ◽  
Neoclassical Growth

We develop a model that, at the aggregate level, is similar to the one-sector neoclassical growth model; at the disaggregate level, it has implications for the path of observable measures of technology adoption. We estimate it using data on the diffusion of 15 technologies in 166 countries over the last two centuries. Our results reveal that, on average, countries have adopted technologies 45 years after their invention. There is substantial variation across technologies and countries. Newer technologies have been adopted faster than old ones. The cross-country variation in the adoption of technologies accounts for at least 25 percent of per capita income differences. (JEL O33, O41, O47)

INTANGIBLE CAPITAL AND INTERNATIONAL INCOME DIFFERENCES

2011 ◽  
Vol 17 (3) ◽  
pp. 621-645 ◽  
Author(s):  
Aamir Rafique Hashmi
Keyword(s):  
Human Capital ◽  
Growth Model ◽  
American Economic Review ◽  
Intangible Capital ◽  
Capital Account ◽  
Income Differences ◽  
Neoclassical Growth Model ◽  
Poor Countries ◽  
Neoclassical Growth

I add intangible capital to a variant of the neoclassical growth model that already features physical and human capital, and study the implications for international income differences. I calibrate the parameters associated with intangible capital by using new estimates of investment in intangibles by Corrado et al. [Review of Income and Wealth 55, 661–685 (2009)] and depreciation rates by Corrado and Hulten [American Economic Review 100, 99–104 (2010)]. I find that for a given efficiency difference between rich and poor countries, the model with intangible capital can explain more than double the income differences of the model without. Put another way, in the benchmark case, differences in intangible capital account for 14.3% of the observed income differences. I also examine the role played by intangible capital in versions of the model with barriers to accumulation. In all the variants that I consider, differences in intangible capital account for 10% to 22% of the observed income differences.

scholarly journals Transition dynamics in the neoclassical growth model: the case of South Korea

2015 ◽  
Vol 15 (2) ◽  
Author(s):  
Yongsung Chang ◽  
Andreas Hornstein
Keyword(s):  
South Korea ◽  
Growth Model ◽  
Capital Accumulation ◽  
Transition Period ◽  
Early Stage ◽  
Relative Price ◽  
Neoclassical Growth Model ◽  
Investment Rate ◽  
Stage Of Development ◽  
Neoclassical Growth

AbstractMany successful examples of economic development, such as South Korea, exhibit long periods of sustained capital accumulation. This process is characterized by a gradually rising investment rate along with a moderate rate of return to capital, both of which are strongly at odds with the standard neoclassical growth model that predicts an initially high and then declining investment rate with an extremely high return to capital. We show that minor modifications of the neoclassical model go a long way toward accounting for the capital accumulation path of the South Korean economy. Our modifications recognize that (i) agriculture (which makes up a large share of the aggregate economy in the early stage of development) does not rely much on capital and (ii) the relative price of capital declined substantially during the transition period.

scholarly journals Relative Prices and Sectoral Productivity

2019 ◽  
Vol 18 (3) ◽  
pp. 1400-1443 ◽  
Author(s):  
Margarida Duarte ◽  
Diego Restuccia
Keyword(s):  
Income Elasticity ◽  
Service Industries ◽  
Relative Price ◽  
Aggregate Productivity ◽  
Substantial Impact ◽  
Relative Prices ◽  
Income Elasticities ◽  
Negative Income ◽  
Sectoral Productivity ◽  
Cross Country

Abstract The relative price of services rises with development. A standard interpretation of this fact is that productivity differences across countries are larger in manufacturing than in services. The service sector comprises heterogeneous categories and we document that many disaggregated service categories feature a negative income elasticity of relative prices. We divide service industries into two broad categories based on the income gradient of its relative price: traditional services with positive income elasticities and nontraditional services with negative income elasticities of relative prices. Using an otherwise standard multisector development accounting framework extended to include an input–output structure, we find that the cross-country income elasticity of sectoral productivity is large in nontraditional services (1.15), smaller in manufacturing (1.05), and much smaller in traditional services (0.67). Eliminating cross-country productivity differences in nontraditional services reduces aggregate income disparity by 58%, a 7.9-fold reduction in aggregate productivity differences. Heterogeneity between traditional and nontraditional services also has a substantial impact on aggregate productivity.

STEADY-STATE REAL EFFECTS OF INFLATION IN A HECKSCHER–OHLIN CASH-IN-ADVANCE MODEL

2004 ◽  
Vol 8 (5) ◽  
pp. 633-647 ◽  
Author(s):  
SHI-FENG CHUANG
Keyword(s):  
Steady State ◽  
Time Preference ◽  
State Level ◽  
Relative Prices ◽  
Neoclassical Growth Model ◽  
Real Effects ◽  
Total Capital ◽  
Total Labor ◽  
Neoclassical Growth ◽  
Cash In Advance

This paper explores the possible real effects of inflation within a two-sector neoclassical growth model of the Heckscher–Ohlin type with a cash-in-advance constraint on the purchases of consumption goods. The main findings are that the relative prices of both factors and of both goods, which are linked via a Stolper–Samuelson relation, depend only on the rate of time preference, not on any monetary variable; that the steady-state level of total capital can be influenced by inflation if the capital intensities and the cash requirements in both sectors differ, leading to Tobin effects or reversed Tobin effects; and that higher inflation unambiguously reduces total labor supply and leads to a reversed Tobin effect in most cases if the labor/leisure choice is endogenized.

Competitive and Complementary Relations in International Travel: The Case of British Travel to Cyprus

2019 ◽  
Vol 10 (5) ◽  
pp. 395-420
Author(s):  
Petros Anastasopoulos ◽  
Keyword(s):  
Strong Association ◽  
International Travel ◽  
Relative Price ◽  
Annual Data ◽  
Export Demand ◽  
Relative Prices ◽  
Vector Error Correction ◽  
Vector Error ◽  
The Mediterranean ◽  
Demand Equations

This is an econometric analysis of demand for travel to Cyprus by Britons. We examined the competitive and complementary relations between travel to Cyprus and other well-established travel destinations in the Mediterranean basin. Because many package tours include several countries in their destinations within a given journey, and because individual travelers find it more advantageous to visit more than one country in a single trip, it may be meaningful to examine international travel within the contest of groups of countries rather than a single country competing for international travelers. Specifically, we provide an analysis of the competitive and complementary relations existing between the tourism sectors of Cyprus and that of Greece, Spain and Portugal for British travelers. We provide estimates of income and relative price elasticities based of export demand equations upon annual data from 1980-2016. We tested for the stationarity of the variables and derived estimates of the Vector Error Correction Model (VECM). These tests confirm a strong association between the incomes of Britons and their decision to travel to Cyprus. Furthermore, we show the relative prices between Cyprus and other competing destinations in the Mediterranean to play an important role in determining British travel to Cyprus.

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