Is Piketty’s ‘Second Law of Capitalism’ fundamental?

Per Krusell, Tony Smith 01 June 2014

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Over the last several weeks, we have thought quite a bit about the main message in Thomas Piketty’s now world-famous book, Capital in the Twenty-First Century (Piketty 2014). We have also discussed it at great length with colleagues. In sum, at least in our departments, there has been a massive collective effort at interpreting both the material presented in the book and the background material on which the book builds. In this column we would like to present one perspective on the book that does not seem to have attracted sufficient attention in the public discussions.

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Topics:  Poverty and income inequality

Tags:  growth, Inequality, wealth, saving, savings

How highly educated immigrants raise native wages

Giovanni Peri, Kevin Shih, Chad Sparber 29 May 2014

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Immigration to the US has risen tremendously in recent decades. Though media attention and popular discourse often focus on illegal immigrants or the high foreign-born presence among less-educated workers, the data show that immigrants are drawn from both ends of the education spectrum. At the low end, immigrants grew from 5% of workers with a high school degree or less in 1970 to 20.8% in 2010. At the high end, the figure rose from 7.3% to 18.2% for those with graduate degrees over the same period.1

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Topics:  Labour markets Migration Productivity and Innovation

Tags:  US, growth, productivity, wages, immigration, innovation, complementarities, STEM

DynEmp: New cross-country evidence on the role of young firms in job creation, growth, and innovation

Chiara Criscuolo, Peter N. Gal, Carlo Menon 26 May 2014

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Since well before the crisis, many OECD economies have been confronted with sluggish productivity growth. In the aftermath of the crisis, job creation has also stalled and has become an important policy issue. Business dynamics are at the core of the creative destruction process. Available evidence points to significant cross-country heterogeneity in the dynamism of businesses, even after taking into account differences in sectoral composition. This raises policymakers’ interest in understanding the role of framework conditions in this area.

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Topics:  Labour markets Productivity and Innovation

Tags:  R&D, employment, growth, OECD, job creation, business cycles, firms, start-ups

Democracy causes economic development?

Daron Acemoglu, Suresh Naidu, James A Robinson, Pascual Restrepo 19 May 2014

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A belief that democracy is bad for economic growth is common in both academic political economy as well as the popular press. Robert Barro’s seminal research in this area concluded that “More political rights do not have an effect on growth...The first lesson is that democracy is not the key to economic growth” (Barro 1997, pp. 1 and 11). Meanwhile, reacting to the rise of China, New York Times columnist Tom Friedman argues:

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Topics:  Development Economic history Education

Tags:  democracy, growth

Greening Economics: It is time

Carlo Carraro, Marianne Fay, Marzio Galeotti 26 April 2014

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Shortly after the inception of the financial crisis, The Economist published an article on the split the crisis had brought about among macroeconomists and on the self-criticism some of the most renowned names of academia were applying to the discipline they have been teaching. Economists such as Robert Barro, Bradford DeLong, Paul Krugman, and Willem Buiter questioned the ‘economic model’ they had long used as a reference tool to initiate crowds of students to the dismal science.

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Topics:  Environment

Tags:  growth, teaching, Green growth, natural capital, policy formation

Sustainable growth requires a long-term focus

Pascal Lamy, Ian Goldin 28 March 2014

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Just when we thought high-frequency trading couldn’t get any faster, a US communications company is developing a high-speed laser network between the New Jersey data centres of the New York Stock Exchange and the NASDAQ stock exchange, to shave an additional few nanoseconds off high-frequency trading times.

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Topics:  Environment Financial markets Global crisis International trade

Tags:  growth, climate change, trade, environment, corporate governance, global crisis, high-frequency trading, short-termism, mark-to-market accounting

Redistribution, inequality, and sustainable growth: Reconsidering the evidence

Jonathan D Ostry, Andrew Berg, Charalambos Tsangarides 06 March 2014

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Rising income inequality looms high on the global policy agenda, reflecting not only fears of its pernicious social and political effects (including questions about the consistency of extreme inequality with democratic governance), but also its economic implications.

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Topics:  Development Poverty and income inequality

Tags:  growth, Inequality, redistribution

Making city lights shine brighter

Shahid Yusuf, Danny Leipziger,

Date Published

Mon, 03/03/2014

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growth, Inequality, externalities, cities, urbanisation, agglomeration, slums

Making city lights burn brighter

Danny Leipziger, Shahid Yusuf 03 March 2014

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Urbanisation and per capita GDP are well correlated.1 According to a recent estimate by Gilles Duranton using cross-country data for 2012 (see Figure 1), each percentage point of urbanisation is associated with a five-percentage-point increase in GDP per capita, with urbanisation apparently explaining 60% of the variation in incomes.

Figure 1. Urbanisation and GDP per capita

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Topics:  Development

Tags:  growth, Inequality, externalities, cities, urbanisation, agglomeration, slums

Gaps, cracks and lacunae: The finance and growth nexus in low-income countries

Nauro F Campos, Stefan Dercon 01 March 2014

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Are quantitative and qualitative improvements in financial markets, institutions, instruments, and intermediaries positively and closely associated to the processes of economic growth and development? Does finance cause growth? Once upon a time, economists were deeply divided on these issues. Until about 1990, when endogenous growth gained prominence, there were few economists (notably Joseph Schumpeter) that believed financial development drove growth. The Schumpeterian view is that growth is driven by innovation and innovation is driven by credit. Without finance there is no growth.

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Topics:  Development

Tags:  growth, Low-income countries, Finance

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