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Seasons, savings and GDP

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  • Hernando Zuleta

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Abstract

The industrial revolution and the subsequent industrialization of the economies occurred fi�rst in temperate regions. We argue that this and the associated positive correlation between absolute latitude and GDP per capita is 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 fl�uctuations 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.

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Paper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 004592.

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Length: 45
Date of creation: 31 Jan 2008
Date of revision:
Handle: RePEc:col:000092:004592

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Keywords: absolute latitude; seasons; endogenous growth; capital using innovations;

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Cited by:
  1. Hernando Zuleta, 2008. "Energy saving innovations, non-exhaustible sources of energy and long run; what would happen if we run out of oil," DOCUMENTOS DE TRABAJO 004593, UNIVERSIDAD DEL ROSARIO.

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