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- Title
SEASONAL FLUCTUATIONS AND ECONOMIC GROWTH.
- Authors
ZULETA, HERNANDO
- Abstract
The industrial revolution and the subsequent industrialization of the economies occurred first in temperate regions. We argue that this and the associated positive correlation between absolute latitude and GDP per capita are due to the fact that countries located far from the equator suffered more profound seasonal fluctuations in climate, namely stronger and longer winters. We propose a growth model of biased innovations that accounts for these facts and show that countries located in temperate regions were more likely to create or adopt capital-intensive modes of production. The intuition behind this result is that savings are used to smooth consumption; therefore, in places where output fluctuations are more profound, savings are bigger. Because the incentives to innovate depend on the relative supply factors, economies where savings are bigger are more likely to create or adopt capital-intensive technologies.
- Subjects
ECONOMIC development; INDUSTRIAL revolution; GROSS domestic product; CONSUMPTION (Economics); TEMPERATE climate; MODE of production; ECONOMIC models
- Publication
Journal of Economic Development, 2012, Vol 37, Issue 4, p1
- ISSN
0254-8372
- Publication type
Article
- DOI
10.35866/caujed.2012.37.4.001