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Economic growth and polluting resources: Market equilibrium and optimal policies

Listed author(s):
  • Silva, Susana
  • Soares, Isabel
  • Afonso, Oscar
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0264999312003513
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    Article provided by Elsevier in its journal Economic Modelling.

    Volume (Year): 30 (2013)
    Issue (Month): C ()
    Pages: 825-834

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    Handle: RePEc:eee:ecmode:v:30:y:2013:i:c:p:825-834
    DOI: 10.1016/j.econmod.2012.10.014
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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