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Convergence of Economic Growth and the Great Recession as Seen From a Celestial Observatory

Eamon Duede and Victor Zhorin ()

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Abstract: Macroeconomic theories of growth and wealth distribution have an outsized influence on national and international social and economic policies. Yet, due to a relative lack of reliable, system wide data, many such theories remain, at best, unvalidated and, at worst, misleading. In this paper, we introduce a novel economic observatory and framework enabling high resolution comparisons and assessments of the distributional impact of economic development through the remote sensing of planet earth's surface. Striking visual and empirical validation is observed for a broad, global macroeconomic sigma-convergence in the period immediately following the end of the Cold War. What is more, we observe strong empirical evidence that the mechanisms driving sigma-convergence failed immediately after the financial crisis and the start of the Great Recession. Nevertheless, analysis of both cross-country and cross-state samples indicates that, globally, disproportionately high growth levels and excessively high decay levels have become rarer over time. We also see that urban areas, especially concentrated within short distances of major capital cities were more likely than rural or suburban areas to see relatively high growth in the aftermath of the financial crisis. Observed changes in growth polarity can be attributed plausibly to post-crisis government intervention and subsidy policies introduced around the world. Overall, the data and techniques we present here make economic evidence for the rise of China, the decline of U.S. manufacturing, the euro crisis, the Arab Spring, and various, recent, Middle East conflicts visually evident for the first time.

Date: 2016-04, Revised 2016-08
New Economics Papers: this item is included in nep-his, nep-pr~ and nep-mac
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