Endogenous growth effects of environmental policies (original) (raw)
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Journal of Public Economics, 1995
This paper explores the link between environmental quality and economic growth in an endogenous growth model that incorporates pollution-augmenting technological change. It examines the conditions under which sustainable growth is both feasible and optimal. We explore also how the government should intervene to ensure the optimal levels of natural and knowledge capital, which share a publicgoods character. We establish the conditions for a more ambitious environmental policy to raise long-run growth.
Journal of Economics Zeitschrift f�r National�konomie, 1993
The effects of increased environmentai care on optimal technology choice and long-term growth are studied for an economy in which pollution is a side-product of physical capital used in production. First, it is shown that in case of a standard neoclassical production structure, the result is a less capital-intensive production process whereas the long-run growth rate is not affected. Next, we introduce assumptions of the endogenous growth literature. When there are constant returns to physical capital, an increase in abatement activities crowds out investment and lowers the endogenous growth rate. When human capital accumulation is the engine of growth, physical capital intensity declines and the endogenous optimal growth rate is unaffected by increased environmental care or is even higher, depending on whether or not pollution influences agents' ability to learn.
On the effect of technological progress on pollution: an overlooked distortion in endogenous growth
Oxford Economic Papers, 2013
Abstract We derive a model of endogenous growth with physical capital, human capital and technological progress through quality-ladders. We introduce welfare-decreasing pollution in the model, which can be reduced through the development of cleaner technologies. From the quantitative analysis of the model, we show clear evidence that the externality from technological progress to pollution considered in this model is sufficiently strong to induce underinvestment in R&D as an outcome of the decentralized equilibrium. An important ...
Environmental policy in an endogenous growth model with human capital and endogenous labor supply
Economic Modelling, 2002
This paper analyses environmental fiscal policy within a two-sector endogenous growth model with elastic labor supply. Pollution is modeled as a side product of production. The framework allows us to analyze the consequences of an environmental tax on the economic dynamics. Both transitional dynamics and balanced growth path are computed and the response to an environmental tax change is explored. Short-and long-run welfare costs are also computed. We show that an environmental tax change induces a sharp contrast between short-and long-run effects. The magnitude of this contrast depends on the agents' aptitude to substitute studying time for leisure. ᮊ W. Oueslati . 0264-9993r02r$ -see front matter ᮊ 2002 Elsevier Science B.V. All rights reserved.
Growth, Innovation and Environmental Policy: Clean vs. Dirty Technical Change by
2000
This paper focuses on a two sector endogenous growth model with environmental quality, with two goods and factors, one clean and one dirty. Endogenous technological change creates either clean or dirty innovations, depending on relative profitability. The reduction of emissions intensity of aggregate output is achieved by changing the dirty-bias of technology in the economy. The decentralized equilibrium growth rate
Environmental policy and sustainable economic growth
De Economist, 1995
This paper investigates the consequences of environmental policy for welfare, consumption and production growth in a situation in which environmental quality is initially too low. The natural environment is incorporated in endogenous growth theory in a way that is consistent with some simple notions from the laws of thermodynamics. Environmental policy affects growth, both in the long run and in the short run, by affecting the productivity of investment and the savings behavior of consumers. * I am indebted to L. Bovenberg, S. Cnossen, and Th. van de Klundert for useful comments.
Endogenous Growth, Green Innovation and GDP Deceleration in a World with Polluting Production Inputs
2013
We study economic growth and pollution control in a model with endogenous rate and direction of technical change. Economic growth (growth of real GDP) results from growth in the quantity and productivity of polluting intermediates. Pollution can be controlled by reducing the pollution intensity of a given quantity through costly research (green innovation) and by reducing the share of polluting intermediate quantity in GDP. Without clean substitutes, saving on polluting inputs implies that the rate of GDP growth remains below productivity growth (deceleration). While neither green innovation nor deceleration is chosen under laissez-faire, both contribute to long-run optimal pollution control for reasonable parameter values. In our baseline-model, there are no exhaustible resources. In an extension, we analyze the e ects of resource-scarcity on the environment, long-run growth and the direction of technical change.
Environmental Pollution in a Growing Economy with Endogenous Structural Change
SSRN Electronic Journal, 2000
In this paper we study the impact of environmental pollution in an endogenous growth model that allows for structural change. The model is based on doublydifferentiated R&D where newer, less polluting technologies gradually replace older ones. The analysis shows that the presence of environmental externalities stimulates structural change but reduces the growth rate of the economy. Further, comparing the models with and without structural change demonstrates that the latter implies stronger environmental damages and, consequently, a lower growth rate than the first one. Finally, levying a tax on the polluting output speeds up structural change, thus, reducing environmental pollution and spurring economic growth. This can give new support for the double dividend hypothesis.
Economic growth and polluting resources: Market equilibrium and optimal policies
Economic Modelling, 2013
This paper develops an endogenous growth model to study the decentralized equilibrium and the optimum conditions in an economy which uses polluting resources. The model includes two policy instruments, a subsidy to final consumption and an emissions tax. It also considers two forms of endogenous technical change, pollution-reducing knowledge and horizontal innovation. We show that, if the efficiency of knowledge to reduce emissions is sufficiently high, a higher output is compatible with lower emissions in both levels and growth rates. Additionally, if the two instruments are used together the economy may achieve a higher output and lower emissions since the subsidy may offset, at least partially, the negative tax effects.
The role of human capital and development for pollution control : an endogenous growth model
2018
Human capital and technological change are key factors for the realisation of a sustainable growth path, particularly if production causes environmental pollution. We analyse an endogenous growth model with pollution and abatement. Human capital is used in the production sector as well as in pollution control. In the steady state, economic growth and the level of pollution are constant. The impact of technological change on the pollution level is shown to depend on the development stage of the economy. Less developed economies with a lower productivity level in the education sector benefit more from productivity improvements in the education sector which reduce the pollution level as a by-product. In contrast, more developed economies with a higher productivity level in the education sector experience stronger environmental improvements from technological change in the abatement sector. Higher quality in abatement activity allows for a decrease of abatement expenditures associated w...