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Economic Growth under Stochastic Population and Pollution Shocks

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  • Théophile T. Azomahou
  • Tapas Mishra
  • Mamata Parhi

Abstract

type="main"> We study dynamics of interactions among economic growth, population, and environmental quality when stochastic shocks in these systems display long-memory property. We make two important contributions. First, we show that the long-memory persistence in economic growth is determined jointly by the convergence speed of shocks in both environmental quality and population. Second, by simulating a modified Solow-Swan economy we demonstrate that the convergence-speed of shocks in these systems significantly affects the long-run growth trajectory of output. Our empirical examination evince that adjustment of output to long-run equilibrium is very slow, thanks to the slowly dissipating population and pollution shocks.

Suggested Citation

  • Théophile T. Azomahou & Tapas Mishra & Mamata Parhi, 2015. "Economic Growth under Stochastic Population and Pollution Shocks," Manchester School, University of Manchester, vol. 83(3), pages 314-345, June.
  • Handle: RePEc:bla:manchs:v:83:y:2015:i:3:p:314-345
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    File URL: http://hdl.handle.net/10.1111/manc.12062
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    1. repec:bla:scotjp:v:64:y:2017:i:3:p:263-282 is not listed on IDEAS
    2. Mustafa Akan, 2016. "Sustainability, Consumption, And Technology," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 5(2), pages 9-25.

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