Property rights and long-run economic growth
Quantitative analysis of the model assigns a major role to changes in property rights in explaining growth over the very long run. As one example, the number of new ideas produced in a year rises by a factor of 110,000 in the simulated economy between 25,000 B.C. and the 20th century. A factor of 108 of this increase is due to the fact that the 20th century has a larger population base from which inventors are drawn; a factor of 4 of this increase is attributed to knowledge spillovers, i.e. to the notion that it is easier to produce ideas today because of discoveries made in the past. The remaining factor of 245 is assigned to an increase in the property rights variable, the fraction of resources used to compensate inventive eﬀort.