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The unilateral implementation of a sustainable growth path with directed technical change

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  • van den Bijgaart, Inge

Abstract

We determine the conditions under which unilateral policies can implement global sustainable growth in a dynamic two-country directed technical change framework. Domestic climate policies alter the structure of domestic and foreign production and thereby innovation incentives across countries. Implementing sustainable growth requires redirecting global innovation to the nonpolluting sector. If most innovation takes place in the foreign country, policies must redirect foreign innovation by relocating clean production to the foreign country. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that ratified the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.

Suggested Citation

  • van den Bijgaart, Inge, 2017. "The unilateral implementation of a sustainable growth path with directed technical change," European Economic Review, Elsevier, vol. 91(C), pages 305-327.
  • Handle: RePEc:eee:eecrev:v:91:y:2017:i:c:p:305-327
    DOI: 10.1016/j.euroecorev.2016.10.005
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    Cited by:

    1. Francesco Lamperti & Mauro Napoletano & Andrea Roventini, 2019. "Green transitions and the prevention of environmental disasters : market based vs command-and-control policies," Sciences Po publications info:hdl:2441/14g286e42n8, Sciences Po.
    2. Jan Witajewski-Baltvilks & Carolyn Fischer, 2018. "Green Innovation And Economic Growth In A North-South Model," IBS Working Papers 10/2018, Instytut Badan Strukturalnych.
    3. Peter K. Kruse-Andersen, 2016. "Directed Technical Change and Economic Growth Effects of Environmental Policy," Discussion Papers 16-06, University of Copenhagen. Department of Economics.
    4. Oladi, Reza & Caplan, Arthur J. & Gilbert, John, 2018. "Sequestration and the engagement of developing economies in a global carbon market," Resource and Energy Economics, Elsevier, vol. 52(C), pages 50-63.
    5. Hillebrand, Elmar & Hillebrand, Marten, 2019. "Optimal climate policies in a dynamic multi-country equilibrium model," Journal of Economic Theory, Elsevier, vol. 179(C), pages 200-239.
    6. Peter K. Kruse-Andersen, 2019. "Directed Technical Change, Environmental Sustainability, and Population Growth," Discussion Papers 19-12, University of Copenhagen. Department of Economics.

    More about this item

    Keywords

    Unilateral environmental policy; Directed technical change; Trade;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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