Wednesday, November 17, 2010

Madsen et al.: Four centuries of British economic growth: The roles of technology and population

In a paper forthcoming in the Journal of Economic Growth* Jakob Madsen et al. test the ability of alternative endogenous growth theories to explain the British Industrial Revolution. They conclude that Schumpetarian growth theory can explain the data while "semi-endogenous growth theory" cannot. Madsen recently won an ARC fellowship to pursue this research further.

Interestingly, when the change in coal production is added to the regression for labor productivity growth as a control variable its effect is found to be insignificant. Naturally, I find this surprising. What is being measured though is the effect of energy use controlling for a bunch of innovation variables. The expansion of coal use required extensive innovation. So maybe this isn't so surprising. Also the data is in terms of annual first differences, which will likely reduce the size of the effect found.

*A free version of the paper is available here.

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