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Transitional Impacts of Environmental Policy in an Endogenous Growth Model

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  • Bovenberg, A Lans
  • Smulders, Sjak A

Abstract

To explore the link between a tighter environmental policy and economic growth, the authors employ an endogenous growth model with endogenous technological progress in abatement technologies. The environment, which is modelled as a renewable resource, acts both as a public consumption good and as a public input into production. The entire transition towards a new balanced-growth path after a tightening of environmental policy is computed analytically. The authors find sharp contrasts between short-run and long-run effects. Whereas the level and the growth rate of output may decline in the short run, income growth may improve in the long run. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 37 (1996)
Issue (Month): 4 (November)
Pages: 861-93

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Handle: RePEc:ier:iecrev:v:37:y:1996:i:4:p:861-93

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  1. Hartwick, John M., 1990. "Natural resources, national accounting and economic depreciation," Journal of Public Economics, Elsevier, vol. 43(3), pages 291-304, December.
  2. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
  3. Caballe, Jordi & Santos, Manuel S, 1993. "On Endogenous Growth with Physical and Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1042-67, December.
  4. Bovenberg, A.L. & Smulders, S., 1993. "Environmental Quality and Pollution-Saving Technological Change in Two- Sector Endogenous Growth Model," Papers 9321, Tilburg - Center for Economic Research.
  5. Karl-Göran Mäler, 1991. "National accounts and environmental resources," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 1(1), pages 1-15, March.
  6. Judd, Kenneth L., 1982. "An alternative to steady-state comparisons in perfect foresight models," Economics Letters, Elsevier, vol. 10(1-2), pages 55-59.
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