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Growth discontinuities at borders

Maxim L. Pinkovskiy ()
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Maxim L. Pinkovskiy: Federal Reserve Bank of New York

Journal of Economic Growth, 2017, vol. 22, issue 2, 145-192

Abstract: Abstract I document the existence of discontinuities in short- and long-term growth rates of satellite-recorded nighttime lights per capita across national borders, with growth rates of nighttime lights increasing abruptly as one crosses a border from a slower-growing country into a faster-growing one. I show that growth discontinuities are not driven by any special set of borders, or by differences in geographic and climatic conditions on the different sides of borders. I investigate multiple explanations for growth discontinuities, including differences in the determinants of growth across borders and differences in the extent to which borders form barriers to flows of goods, capital or people. I present evidence that differences in the quality of the rule of law are consistently helpful in explaining differences in growth between two countries at their border, and conclude that national-level variables such as institutions and policies may have rapid and important effects on growth.

Keywords: Economic Growth and Development; Nighttime lights data; National borders; Institutions; Public goods (search for similar items in EconPapers)
JEL-codes: E01 O43 O47 O57 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:kap:jecgro:v:22:y:2017:i:2:d:10.1007_s10887-016-9139-2