Working Paper: NBER ID: w15094
Authors: Charles I. Jones; Paul M. Romer
Abstract: In 1961, Nicholas Kaldor used his list of six "stylized" facts both to summarize the patterns that economists had discovered in national income accounts and to shape the growth models that they were developing to explain them. Redoing this exercise today, nearly fifty years later, shows how much progress we have made. In contrast to Kaldor's facts, which revolved around a single state variable, physical capital, our six updated facts force consideration of four far more interesting variables: ideas, institutions, population, and human capital. Dynamic models have uncovered subtle interactions between these variables and generated important insights about such big questions as: Why has growth accelerated? Why are there gains from trade?
Keywords: economic growth; Kaldor facts; ideas; institutions; human capital
JEL Codes: O10; O3; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increases in the extent of the market (D40) | enhanced flows of goods, ideas, finance, and people (F69) |
| enhanced flows of goods, ideas, finance, and people (F69) | accelerates growth (O40) |
| acceleration of growth over thousands of years (O40) | rising stock of ideas (O36) |
| rising stock of ideas (O36) | higher productivity and economic growth (O49) |
| variation in growth rates (O41) | distance from the technology frontier (O49) |
| institutional factors (D02) | large income and total factor productivity (TFP) differences (O49) |
| human capital per worker (J24) | economic growth (O49) |
| increase in human capital per worker (J24) | does not lead to a decline in relative wages (F66) |