Growth, democracy, and trade: Exploring the links. Essays in dynamic economics.

摘要

It is widely believed that average growth rate and volatility of growth rates are negatively correlated. We find the result is not robust to either the definition of growth rate, or the composition of the sample. We show that the use of log difference as growth rate creates a bias towards finding a negative relationship. Our investigation reveals that there is no significant relationship between the two variables.; However, the volatility differs systematically across countries. We find that there is a high correlation between political regimes across countries and volatility. We explain this observation using a dynamic model in which democracy is parameterized by the fraction of people who benefit from being in power. The government maximizes the utility of the group in power using a redistributive tax scheme. We find the optimal tax policy in non-democratic countries, in contrast to that in democratic countries, is such that tax rates are high when output is low and vice-versa. This leads to higher volatility of growth rates in non-democratic countries. The model's predictions are borne out by data in several dimensions.; In the fourth essay we characterize the equilibrium for a small economy in a dynamic Heckscher-Ohlin model with uncertainty. We show that when trade is balanced period-by-period, the per capita output of a small open economy converges to an invariant distribution independent of the initial wealth. At the invariant distribution, with probability one there are some periods in which the small economy diversifies. These results are in sharp contrast with those of deterministic dynamic Heckscher-Ohlin models. Numerical simulations show that the speed of convergence is increasing in the size of the shocks. Thus, our results extend the predictions of income convergence, standard in one sector neoclassical growth models, to a dynamic Heckscher-Ohlin environment.; We also prove the existence of a minimum positive fixed point for the optimal capital policy function under very general assumptions. This proof removes one of the technical stumbling blocks in the theory of stochastic growth.