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Long-term economic growth under environmental pressure: An optimal path

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  • Dai, Feng
  • Li, Pengpeng
  • Liang, Ling

Abstract

This paper presents a model, based on the advance-retreat course (ARC) model (Dai, Liang, & Wu, 2013; Dai, Liu, & Liang, 2013), of long-term economic growth under environmental pressure. The model is used to explain economic convergence and divergence; construct an optimal long-term growth model for basic, emerging and real total output; derive an optimal growth accounting equation; indicate the optimal paths of long-term growth and economic structure change; analyze empirically the growth for U.S. and China. Among the findings are that emerging industries contribute significantly to real output in the long term; that economic diversification can increase real output and promote long-term growth. The paper suggests policy orientations that are needed to avoid economic collapse.

Suggested Citation

  • Dai, Feng & Li, Pengpeng & Liang, Ling, 2016. "Long-term economic growth under environmental pressure: An optimal path," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 15-24.
  • Handle: RePEc:eee:quaeco:v:59:y:2016:i:c:p:15-24
    DOI: 10.1016/j.qref.2015.03.008
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    References listed on IDEAS

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    More about this item

    Keywords

    Long-term economic growth; Environmental pressure; Optimal path; Convergence; Divergence;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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