July 2007
Life in unequal growing economies. Technical manuscript.
Incomplete,
very rough draft
PDF (43
pages, 400Kb)
Conference presentation
Brown
University Watson Institute Conference, 2007 April
Abstract:
This paper characterizes the dynamic welfare implications of
varying patterns of growth and inequality. In their impact
on poverty, historically observed changes in aggregate
growth overwhelm those in inequality. However, their
welfare implications are more nuanced. For a reasonable
range of utility
functions the average person on
earth is certainly better off living in the faster-growing more
unequal economies, given historical
patterns of growth and inequality. However, the relative benefits to
that experience differs across countries, even within just the
fast-growing ones.
While the welfare impact of aggregate growth continues to
be the most significant, that of inequality overwhelms that
of business cycles.
April 2007
The Digital Divide. Incomplete, rough draft
PDF (56
pages, 444Kb)
(How would I spend US\$50bn?)
This paper presents
dynamic welfare calculations to evaluate costs and benefits on the Digital
Divide, the unequal distribution of digital technologies across
countries and people.
It provides, among other things, an explicit analytical model of
technological dissemination,
producing, from feedback and contagion effects across society
and individuals, Verhulst-equation distribution dynamics in
a logistic curve.
Calibrating a range of models to recent data,
the benefits to spending US\$50bn to close
the Digital Divide range from US\$...
April 2007
Growth and distribution. Technical manuscript. Incomplete,
very rough draft
PDF (139
pages, 608Kb)
[Continually updated with most recent changes
(2006.08.01 - Second order differential equation characterization for
value when inequality is a diffusion process);
(2006.07.31 - Discrete transition probability matrix calculations, so
there's more of that now gradually appearing);
(2005.11.04 - Begin - numerical calculations on the value in
inequality and growth. Resolvents in 6.2.2.
Discrete time calculations in own [Appendix] Section
8.);
(2005.06.02 - Begin - section on decomposing world income inequality;
(2005.05.11 - Begin - data section 2 new, summarizing what's known
already (renumbered subsequent sections) - this is
taking a long time to write;
(2005.04.29 - Motivation and summary in Section 1);
(2005.04.19 - Stochastic kernels
section containing discussion of
Markov chains, infinitesimal generators, and resolvent operators;
explicit example of failure in the semigroup property
Section 2)]
- Spatial cluster empirics (June 2003) [With
Helen Simpson]
PDF [40 pages, 736k] |
2/page [752k]
Abstract:
A
useful model of economic geography should determine not just how
much economic activity occurs at a given location
but also where that location is relative to others.
In empirical studies, those latter features appear
nowhere in measures of
concentration or in cross-section and panel data regression.
Indeed, they are absent in many analytical models of economic
geography.
We provide a new
econometric method for studying clustering that takes
explicitly into
account such spatial relations, motivating the analysis with
a theoretical model of dynamically evolving spatial
distributions that generates a spatial law of motion. Applying our
techniques to geographically
disaggregated data on UK manufacturing,
we find ...
- The value in inequality and
growth (April 2003)
Abstract:
Independent of whether one is causal for the other, growth and
inequality can be modelled as jointly-evolving components in a
stochastic process of distribution dynamics. Poverty, or any other
feature of the income distribution, can then be read directly off the
properties of that stochastic process. This paper calibrates utility
under a range of alternative hypotheses for individual agents within
that dynamically-evolving income distribution. Given empirically
relevant descriptions of world income distribution dynamics, the
impact of macroeconomic growth is, almost everywhere, overwhelmingly
what matters---not just for poverty but for a wide range of welfare
measures.
This paper follows on
One third of the world's growth and
inequality.
- Digital goods and the New Economy
(March 2003)
Abstract and details
-
The Sir Richard Stone
Lectures: Growth
and Distribution, July 2002
(Bank of England,
Cambridge University Press,
and
NIESR)
Lecture 1
[pdf,
138k]
Tuesday 02 July, Bank of England.
Lecture 2 [pdf,
140k]
Wednesday 03 July, NIESR.
(The slides overlap about 60%.)
Abstract:
The dynamics of economic growth and income distribution
represent the two most important forces
consistently affecting the welfare of humanity over any
meaningful stretch of time.
Economic growth is good, unambiguously for all, but
especially for the poor.
Inequality matters much, much less---whether positively or
negatively, whether by itself or as a causal factor
driving growth.
Gonzalo Vina's
article, 21 August 2002 on the Dow Jones Newswire, reproduced here
with permission.
- Almost efficient innovation
by pricing ideas (June 2002)
CEP Working Paper#1219
PDF [59 pages, 362k;
2/page, 346k] |
Zipped Type 1 Postscript [220k]
Abstract:
Innovation is the creation of intellectual assets; intellectual assets
are distinguished by nonconvexities. But different nonconvexities
affect outcomes differently. Provided knowledge is finitely
expansible, nonrivalry causes no difficulties for the existence and
expost efficiency of
competitive equilibrium. However, the minimum-size
indivisibility in creating intellectual assets renders competitive equilibrium
socially inefficient in general, even though existence is maintained. The
inefficiencies have the size of Dupuit triangles. Innovation patterns
are invariant within a range of legal structures regulating
intellectual asset dissemination.
[David Warsh's
21
July 2002 column on
economicprincipals.com
discusses this and the following, together with the Boldrin-Levine
article.
Similarly, Douglas Clement's
Creation
Myths: Does Innovation Require Intellectual
Property Rights? March 2003 article in
Reason Online.]
-
24/7 competitive innovation (April 2002)
CEP Working Paper#1218
PDF [66 pages, 371k;
2/page, 353k] |
Zipped Type 1 Postscript [211k]
Abstract:
Intellectual property (IP) rights differ from ordinary property
rights. Historically, societies have tolerated monopolistic
inefficiency from IP protection to incentivize intellectual asset
creation. This paper considers how competitive markets can optimally
allocate resources, bypassing that monopolistic inefficiency. It
departs from earlier related work in three ways: First, it allows
economic actions undertaken progressively rapidly as technology
advances. Second, it weakens property rights yet further, allowing
both consumers and asset holders to make and sell copies. Third, it
distinguishes nonrivalry from infinite reproduction. The first
departure restores the traditional view that competitive markets fail.
The second and third, surprisingly, have competitive markets achieve
social efficiency.
[David Warsh's
21
July 2002 column on
economicprincipals.com
discusses this and the above, together with the Boldrin-Levine
article.
Similarly, Douglas Clement's
Creation
Myths: Does Innovation Require Intellectual
Property Rights? March 2003 article in
Reason Online.]
-
Matching demand and supply in a weightless economy:
Market-driven creativity with and without IPRs (March 2002)
[Moved]
-
One third of the world's growth and inequality
(March 2002)
[Moved]
-
Spatial agglomeration dynamics
(February 2002)
[Moved]
-
Technology dissemination and economic growth:
Some lessons for the New Economy
(February 2002)
[Moved]
-
Some simple arithmetic on how income inequality and economic growth matter
(11 June 2001)
The first Journal of Applied Econometrics Lecture, Econometric
Society meetings, Auckland NZ, July 2001
[Some of the discussion here has been extracted into
One third of the world's growth and inequality
above. The more extensive multi-country calculations that distinguish
this paper are ready to be put in the graphs and discussions, but are
now awaiting re-doing with the new, revised Deininger-Squire data.]
PDF [43 pages, 256k]
Zipped Type 1 Postscript [179k]
Abstract:
This paper models inequality and growth as components in
a vector stochastic process.
It calibrates
the impact each has on different welfare indicators and on
the world's income distribution.
For personal income inequalities worldwide,
the forces assuming first-order importance are
macroeconomic ones determining cross-country
patterns of growth and convergence.
The relation between a country's growth performance
and its inequality plays only a
tiny role in global inequality dynamics.
The paper concludes that standard
panel data econometric methods produce results
misleading for the relation between inequality and growth.
Once this is taken into account,
inequality is irrelevant for economic growth.
If you like this kind of thing, then you might also like
Cross-Country Growth Comparison: Theory
to Empirics
and
Empirics for growth and
distribution: Stratification, polarization, and convergence
clubs.
-
Demand-driven knowledge clusters in a weightless economy
(April 2001)
PDF [29 pages, 178k]
Zipped Type 1 Postscript [145k]
Presented at the
Knowledge as an economic good conference
(Beijer Institute/Fondazione Eni Enrico Mattei, April 2001, Palermo
Sicily.
Visit
FEEM
Abstract:
That knowledge and technology matter for economic growth and
performance is widely accepted. However, most formal analyses of
knowledge-driven economies have focused on the supply side: research
and development and productivity. In
modern high-tech economies where, say, information and communications
technologies figure prominently, just as important is the demand side of
markets for goods akin to knowledge.
This paper develops a model of knowledge
cluster formation in a geographical space, driven by demand-side
characteristics. Knowledge concentrations in space spontaneously
emerge, even when physical distance and transportation costs are
irrelevant. These clusters manifest in equilibrium as waves on a
smooth, otherwise featureless, three-dimensional globe; they arise to
resolve the tension between spatial spillover externalities and the
costs of adapting to new sophisticated knowledge-products.
If you like this kind of thing, then you might also like
Spatial agglomeration dynamics,
Internet cluster emergence,
and
The weightless economy in development.
-
Economic Growth: Measurement (February 2001)
[Moved]
-
ICT clusters in development: Theory and evidence
(February 2001)
[Moved]
-
Growth and distribution
(August 2000)
Paper available after the Econometric Society World Congress,
Seattle, August 2000
(PDF [208k] presentation overheads,
plus Lucas and Solow graphs [82k] used)
Abstract:
This paper analyzes country growth and income distributions
as outcomes dynamically and jointly determined from another
more fundamental underlying mechanism.
This recasts emphasis in studies of economic growth, and
reorients discussion of inequality and growth.
The focus allows a selective survey of growth
models where cross-section distributional effects are key.
The analysis suggests that two elements matter for the cross
section dynamics of countries:
(1)~technology---for understanding the expansion in
performance possibilities for an economy viewed in
isolation---and (2)~dissemination---for understanding the
co-evolution of those for many economies viewed
jointly.
For distribution dynamics across people, the paper finds
that empirically the impact of historically-observed
aggregate growth overwhelms that of changes in measured
cross-sectional inequality.
-
$6\times 10^9$: Some dynamics of global inequality and growth
(December 1999)
Current (incomplete December 1999) version in
(PDF [180k])
(Zipped Type 1 Postscript [590k])
Abstract:
This paper merges work on ``emerging twin peaks''
distribution dynamics for per
capita incomes across countries, with personal income
distributions within countries over time.
The result is a picture of worldwide income distribution
dynamics across people.
The paper finds that
for determining world inequalities,
the forces assuming first-order importance are
those macroeconomic ones that determine cross-country
patterns of growth and convergence.
Inequality across individuals worldwide remains a critical
issue of increasing concern.
However, the relation between a country's growth performance
and its within-country inequality plays only a
small role in global inequality dynamics.
-
Cluster emergence on a global continuum
(October 1999)
(PDF [246k])
(Zipped Type 1 Postscript [615k])
Abstract:
This paper models spatial economic development, making
explicit both time and space.
Locations are not just points---which would leave
unanswered
the question, What happens in between?---but instead
a continuum.
Equilibrium is a law of motion in spatial distribution
dynamics, or a transition kernel in measures on geographical
space.
The paper provides a model of economic geography
without transportation costs; it is used to study the
evolution across Earth of financial, Internet, telecommunications, and
computer activity.
If you like this kind of thing, then you might also like
Internet cluster emergence,
ICT clusters in development,
and
Demand-driven knowledge clusters.
-
Ideas determining convergence clubs
(July 1999)
Current (incomplete July 1999) version in
(PDF [142k])
(Zipped Type 1 Postscript [487k])
Abstract:
This paper develops a model of cross-country growth and
distribution dynamics where sharing ideas is important. The
model shows clusters of economies emerging from deliberate
choices made in equilibrium. It characterizes how, over
time, the cross-section distribution of countries stratifies
into distinct income classes.
-
Superstar knowledge-products in a model of growth
(March 1998)
[[I have not yet had a chance to update this to the version
referred to in "The weightless economy in
economic development"; revision available soon.]]
(PDF)
[160k]
Abstract:
This paper develops a hedonic-price growth model where
Superstar rewards induce patterns of
innovation, learning, and income mobility and inequality.
The model provides one formalization of how
consumer attitudes towards knowledge-like goods (e.g.,
computer software) influence the latter's creation and
dissemination, and thereby economic growth
and income distribution dynamics.
The model can be viewed as applying:
(i) across producers and consumers within
developed or developing economies;
or
(ii) to the process of knowledge dissemination from
developed to developing countries.
The model generates dynamics consistent with particular
features of actual cross-country income distribution
dynamics.
-
A modest proposal for structuring public debt
(with Spencer Dale and Alessandra Mongiardino) (Apr. 1997)
(PDF) [57 pages, 303K]
(Zipped Type1 PS) [520K]
Abstract:
This paper proposes structuring public debt
using considerations of robustness rather
than strict optimality.
Our proposal minimizes, over the infinite
future, the conditional uncertainty surrounding public
financing requirements.
We estimate holding-period returns and market values
on nominal and indexed UK government debt for a
range of maturities, and derive the desired debt structures,
according our proposal, that would be implied by the
historical data.
Although implications are not precise in all directions,
given the historical UK data, our proposal leads to the
government strongly favoring index-linked debt over
conventionals.
-
tsrf reference manual (Oct. 1999)
Use the tsrf homepage.
-
Discarding non-stick frying pans for economic growth
(Sep. 1996)
Abstract:
This article describes features of dematerialization---an increasing
weightlessness of the things that economies produce---as growth
proceeds in advanced countries.
It draws out some economic implications of those structural features,
and seeks to explain why these implications matter.
Without apology, this article argues for discarding the ``nonstick
frying pans'' understanding of traditional technical progress in
economic growth.
- Coarse distribution dynamics for convergence,
divergence, and polarization
(Jul. 1995)
Abstract:
This paper describes econometric methods for studying
the dynamics of distributions.
The effects of interest in these distribution dynamics are
three-fold:
(i) convergence in
clusters;
(ii) global divergence and overtaking; and
(iii) polarization and stratification.
To study these, the paper provides structured and
conditional models for distribution dynamics;
it develops an inference theory
for, among other functions of the distribution's dynamics,
the (implied) ergodic distribution.
Applications to cross-country and cross-region
income dynamics are provided.
-
International Patterns of Growth: II. Persistence, Path
Dependence, and Sustained Take-Off in Growth Transition
(Oct. 1992)
(PDF) [37 pp., 158k]
(Zipped Type1 PS) [135k]
Abstract:
This paper studies
transition dynamics in the
cross section of world economies.
It formalizes notions of persistence, path
dependence, and sustained take-off precisely
enough to allow their analysis in data that have
significant cross-section and time-series
variation.
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