Factor shares, inequality, and capital flows

Abstract

I present an endogenous growth model where innovations are factor saving and model the choice of technologies in an Overlapping Generations framework. Markets are competitive and factor prices are determined by marginal productivity of factors; therefore, the income share of reproducible factors increases with the stage of development. Beyond the standard results of this type of model I find that (i) without bequests long‐run growth is not possible, (ii) if the economy presents long‐run growth then intrageneration inequality may last forever but if the economy does not present long‐run growth then in steady state, there is no intrageneration inequality, (iii) when the economy is open, the pattern of capital flows depends not only on the relative abundance of factors but also on the technologies and, for this reason, capital may not flow from rich to poor economies, and (iv) consistently, capital flows may not help to break poverty traps.

Inefficient Labor-Saving Technological Change Due to Frictions in the Labor Market

“…This paper contributes to the literature on factor-saving innovation such as Acemoglu (2003), Acemoglu and Restrepo (2018), Boldrin and Levine (2002), Irmen (2017Irmen ( , 2021, Perera-Tallo (2017), Peretto and Seater (2013), Seater and Yenokyan (2019), Susskind (2017), Zeira (1998), Zuleta (2008bZuleta ( , 2015, Zuleta and Young (2013). In this literature, technological change reduces the need for labor in production, generating endogenous growth.…”

The Effects of Foreign Participation on Chinese Government Bond Yields

“…Coppola, Maggiore, Neiman, and Schreger (2021) found that, after the inclusion of the tax haven factor, official statistics on global capital flows were significantly underestimated. Capital flows can affect domestic investment (Ibhagui, Olawole, 2019), domestic energy consumption (Shahbaz, Chaudhary, and Shahzad, 2018), but may not generate convergence between rich and poor economies (Zuleta, 2015). In particular, financial capital flows can surge, reverse, and stop suddenly (Efremidze, Kim, Sula, Willett, 2017), increasing volatility in the short run for developing countries and harming their economic performance.…”

Is Nominal Wage Rigidity a Problem in the Case of Deflation Driven by Economic Growth?

“…Z dat vyplývá, že v některých zemích podíl mzdových důchodů na HDP roste s tím, jak se chudší ekonomika přibližuje k úrovni ekonomik bohatších (Bentolila a Saint-Paul, 2003). Pro mnohé vyspělé země je v posledních dekádách naopak viditelný pokles objemu mezd na HDP (Zuleta, 2015). Na druhou stranu, až ekonomika dospěje do svého stálého stavu (BGP), Hayekův návrh jednoznačně implikuje negativní tempo růstu nominální mzdy, pokud je tempo růstu pracovní síly (a populace) kladné.…”