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VARIETY, COMPETITION, AND POPULATION IN ECONOMIC GROWTH: THEORY AND EMPIRICS

Published online by Cambridge University Press:  23 December 2019

Alberto Bucci
Affiliation:
University of Milan
Lorenzo Carbonari*
Affiliation:
University of Rome “Tor Vergata”
Giovanni Trovato
Affiliation:
University of Rome “Tor Vergata”
*
Address correspondence to: Lorenzo Carbonari, Department of Economics and Finance, University of Rome “Tor Vergata”, Via Columbia 2, 00133 Rome, Italy. e-mail: lorenzo.carbonari@uniroma2.it. Phone: +39 7259 5708

Abstract

We provide aggregate macroeconomic evidence on how, in the long run, a diverse degree of complexity in production may affect not only the rate of economic growth, but also the correlation between the latter, population growth and the monopolistic (intermediate) markups. For a sample of Organisation for Economic Co-operation and Development (OECD) countries, we find that the impact of population change on economic growth is slightly positive. According to our theoretical model, this implies that the losses due to more complexity in production are lower than the corresponding specialization gains. Using a finite mixture model, we also classify the countries in the sample and verify for each cluster the impact that the population growth rate and the intermediate sector’s markups exert on the 5-year average real gross domestic product (GDP) growth rate.

Type
Articles
Copyright
© Cambridge University Press 2019

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Footnotes

We thank the two anonymous reviewers of this Journal and seminar participants at the 2017 Royal Economic Society Annual Conference (University of Bristol, March 2017) and the Finance and Economic Growth in the Aftermath of the Crisis (University of Milan, September 2017) for their comments and suggestions. Lorenzo Carbonari gratefully acknowledges financial support from the University of Rome “Tor Vergata” (Grant Consolidate the Foundations). The usual disclaimer applies.

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