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Polluting Non-Renewable Resources and Growth

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  • Poul Schou

Abstract

In an endogenous growth model with human capital accumulation, we introduce non-renewable resources which cause flow pollution problems. In this set-up the negative external effect of pollution on productivity does not cause any distortions in the economy: The market economy will achieve the optimal extraction and growth rates. Consequently, emission taxes are unnecessary and, when introduced, will have no effect on the economy. The more important is the negative pollution externality, the larger will be the optimal long-run growth rate (which may be either positive or negative). In the case of a positive human capital externality, consumption in the market economy may approach zero in the long run, although positive consumption growth is socially optimal. Growth-enhancing policies do not necessarily cause a larger drain in the resource stock. Copyright Kluwer Academic Publishers 2000

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 16 (2000)
Issue (Month): 2 (June)
Pages: 211-227

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Handle: RePEc:kap:enreec:v:16:y:2000:i:2:p:211-227

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: endogenous growth; environmental taxes; exhaustible resources; human capital;

References

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  1. Smulders, J.A. & Gradus, R.H.J.M., 1993. "The trade-off between environmental care and long-term growth: Pollution in three proto-type growth models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153405, Tilburg University.
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  4. Smulders, J.A. & Gradus, R.H.J.M., 1996. "Pollution abatement and long-term growth," Open Access publications from Tilburg University urn:nbn:nl:ui:12-72815, Tilburg University.
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  10. Smulders, J.A., 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153411, Tilburg University.
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