In this article, we argue that inflation increases complexity pertaining to knowledge

production (or R&D). Then, we expand a recently developed complexity index based

on entropy to include the effect of inflation. As a result of this new mechanism in an

endogenous growth model, inflation is no longer superneutral. In the model, inflation

can decrease economic growth in a nonlinear way, a sudden upward shock on inflation

can severely hurt economic growth and an inflation cut can be responsible for a take-off.

These effects are illustrated quantitatively.

We devise a generalized Directed Technical Change growth model in which firms spend resources in lobbying activity. As expected, the presence of lobbying distorts the skill premium and economic growth. Lobbying also contributes to a lower technological-knowledge bias toward the skill-sector and constitutes a possible explanation for the diverging empirical evidence on the relationship between the skill premium and the relative supply of skills. An increase in the relative lobbying power of the skilled intensive intermediate goods firms can lead to an increase or decrease in the skill premium, depending on the elasticity of substitution between the skilled and unskilled sectors. Lobbying also introduces possibility of a dual economy, with two different steady states, one characterized by low growth and another by high growth, depending on a threshold level of the lobbying power and on the elasticity of substitution. Quantitative exercises show that lobbying can indeed be quite important in distorting the skill premium and the economic growth.

We devise a North-South endogenous growth model with international trade and money to study the effects of inflation (and monetary policy) on wage inequality, specialization, and growth. The relationship between monetary policy and wage inequality depends on the fact that skilled-production firms are less credit constrained than unskilled-production firms. Interestingly, inflation affects the structure of production by increasing the production share made by skilled-intensive firms, and decreases economic growth. Furthermore, inflation decreases the difference of wage inequality between countries; shrinking the skill premia difference. Moreover, inflation and trade have opposite effects on wage inequality and on specialization: while trade tends to decrease intra-South wage inequality, inflation tends to increase it; while trade tends to increase the number of different intermediate goods produced with unskilled technology in the South; inflation acts the other way around. Results are confirmed quantitatively.

We contribute to the renewable energy consumption-income (and growth) nexus literature by performing an empirical study on a worldwide panel data, also accounting for cross-country dependency using a parsimonious specification that accounts for traditional sources of income differences as well as institutional features of the countries. Our results present either negative or nonsignificant influence of the share of renewable energies consumption to economic growth and income.

The literature on development has pointed out some deeply-rooted determinants of current economic development. Most research on the field has been devoted to developing countries or specific to single countries. We focus on deeply-rooted determinants of development of European regions, in particular on the influence of human capital. Following an identification strategy using instrumental variables, we approach the historical links between current human capital and the presence of universities and trade guilds in medieval times. We show that human capital is an important determinant of income disparities across European regions, and that trade guilds and universities at 1500 are good instruments to track the exogenous influence of the current levels of human capital. This finding shows robustness to several econometric specifications.

Despite some recent evidence according to which different inflation rates have effects on long run growth, endogenous growth theory had advanced little on explaining the mechanics of monetary influence on economic growth. We follow the increasing interest in the issue offering a new explanation for the influence of monetary policy on growth in both long and short run: the cash requirements for households expenditures in education. Quantitatively, the model replicates both the small influence of monetary policy on growth while also highlighting the effects it can have on welfare and allocations of resources throughout different sectors in the economy.

We reassess the impact that robotization has on wages and employment, using a database on US commuting zones from 1990 to 2007. Using an argument based on the transitional dynamics we show that the negative displacement effects of robotization can be surpassed by productivity and reallocation effects, leading to positive effects on employment after a certain level of penetration in industry. In fact, we confirm this effect through regressions that are subject to different robustness checks. Previous evidence according to which robotization always decreases employment and wages are thus not confirmed.

We reassess the relationship between robotization and the growth in productivity in the light of new data and methods. We discover that the effect of robot density in the growth productivity substantially decreased in the post-2008 crisis period. Moreover, in this more recent period, the less strong positive effect of robot density in the growth of productivity is mostly derived from negative effect of hours worked in productivity, showing that robots lost part of their capacity to increase productivity through value-added. By means of quantile regression, we also learn that the effect of robots on labor productivity is stronger for low productivity sectors and that in the most recent period, the effect of robotization in all sectors, felt significantly throughout the distribution, with special emphasis in the
most productive sectors. This highlights one of the possible sources of the secular stagnation in the era of robotization and artificial intelligence technologies.

We extend a two-sector endogenous growth model based on human capital accumulation along two different directions. First, by postulating that individuals may invest time-resources not only in the accumulation of human capital (general knowledge) but also in the accumulation of financial literacy (specific financial knowledge). Second, we maintain that the efficiency with which savings are transferred intertemporally may improve over time, e.g. through the presence of a financial system. We use the model to analyze the relationship between financial literacy and economic growth in the long run. We show that the properties of the balanced growth path equilibrium critically depend on how human capital and financial literacy affect the efficiency of the financial system. Moreover, finance promotes long-run economic growth through two alternative channels, driven either by dynamics of financial returns or by human capital accumulation, respectively. By calibrating the model to the US economy over the 1950-2019 period, we quantitatively assess the effect of financial literacy on long-term growth and the relative magnitude of the two channels.

Recent evidence suggests that fertility rates are (and will be expected to remain in the future) below the replacement level for several countries and especially for the most technological advanced ones, which indicates that the World population will start decreasing sooner or later. In the light of this, we reconsider the Empty Planet result – Jones (2022) – and include human capital and class size effects in R&D endogenous growth models with decreasing population. We find that the introduction of human capital mitigates, or even overcomes, the Empty Planet result. In particular, under some mild conditions, our setting allows obtaining simultaneous long-run economic growth and secular productivity stagnation.

We look at data for Management and Skills demand of firms in existing databases and we highlight the strong positive relationship between both variables. We devise a model that explains this relationship and calibrate it in order to present quantitative results and compare those results with the estimated ones. We discover that a simple model with Management as Technology can replicate well the estimated influence of Management in the skills demand of firms. We also present evidence of the influence of the subitems of Management on skills’ demand and discovered that aside from the talent component of Management, target and performance components greatly influence the demand for skills.

In this paper we study a theoretical link between the effects of increased automation on labor markets, and the fertility decisions of a representative household that is replaced by robots in the production of tasks. We develop a framework in which children provide utility and impose an opportunity cost to the household due to lost labor income.  We show that fertility rate changes are the result of an optimal response to wage variations after the economy is hit by a shock that increases the design quality of robots used in production. Using this model, we characterize an initial equilibrium and simulate the effect of a 10% increase in robot productivity on important endogenous variables, including wages, and find that, in the absence of fixed costs to raising children, the fertility rate increases by approximately 3.4%.

We analyze the effects of lobbying on growth and inequality in a novel directed technical change model, where firms producing different technologies can engage in either demand-seeking lobbying-aimed at increasing demand or rent-seeking lobbying-focused on extracting economic rents.

Demand-seeking lobbying promotes economic growth and, when goods are gross substitutes, also increases inequality. In contrast, rent-seeking lobbying has the opposite effects. We also develop a microfounded theoretical game that models generalized lobbying decisions. In this framework, firms from different sectors can either compete or collaborate in their lobbying efforts. The model reveals that lobbying incentives are stronger when fixed costs are low and when shared sources of lobbying efficiency outweigh sector-specific ones. Given our results, it is essential for policy to distinguish between rent-seeking and demand-seeking lobbying practices, and to design targeted incentives for each in order to effectively influence growth and inequality.

The impact of food prices on food security and short-term economic cycles has recently come into focus due to global supply shortages caused by the Black Sea blockade and the war in Ukraine. We compiled a comprehensive database of prices and output to estimate the short-term effects of food prices on the business cycle both before and during the war. Our findings indicate that price increases do not necessarily lead to economic downturns, even in the face of supply shocks—challenging conventional wisdom.

We develop an overlapping generations endogenous growth model with cash-in-advance constraints for (i) consumers and (ii) R&D firms which is consistent with an effect of inflation on the skill-premium labor share. Inflation decreases the skill premium in both cases and decreases the labor share through (i) which it increases through (ii). The newly described effect of inflation on the labor share is consistent with empirical evidence for a short-run effect.