Sustainable growth in a model with dual-rate discounting
AbstractIn an important model of growth and pollution proposed by Stokey [Int. Econ. Rev. 39 (1998) 1] neither the rate of economic growth nor the rate of growth of emissions depends on the time preference of the representative agent, which seems somewhat paradoxical. To resolve this paradox, we introduce into Stokey's model the assumption of dual-rate discounting, prove the existence of a sustainable balanced growth optimal path, and show that the growth rates of output and emissions are increasing in the proportion between the consumption and the environmental discount factors of the representative agent.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 28 (2011)
Issue (Month): 4 (July)
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Web page: http://www.elsevier.com/locate/inca/30411
Growth Pollution Discounting;
Other versions of this item:
- Kirill Borissov & Kirill Shakhnov, 2011. "Sustainable growth in a model with dual-rate discounting," EUSP Deparment of Economics Working Paper Series Ec-04/11, European University at St. Petersburg, Department of Economics, revised 10 Mar 2011.
- O44 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
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- Yang, Zili, 2003. "Dual-rate discounting in dynamic economic-environmental modeling," Economic Modelling, Elsevier, vol. 20(5), pages 941-957, September.
- Weikard, Hans-Peter & Zhu, Xueqin, 2005. "Discounting and environmental quality: When should dual rates be used?," Economic Modelling, Elsevier, vol. 22(5), pages 868-878, September.
- Lumley, Sarah, 1997. "The environment and the ethics of discounting: An empirical analysis," Ecological Economics, Elsevier, vol. 20(1), pages 71-82, January.
- J.K. Horowitz, 2002. "Preferences in the Future," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 21(3), pages 241-258, March.
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