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Endogenous Growth Effects of Environmental Policies

Author

Listed:
  • Oscar Afonso

    () (Faculty of Economics, University of Porto, and OBEGEF, Portugal)

  • Ana Catarina Afonso

    () (Faculty of Economics, University of Porto, Portugal)

Abstract

To analyse the impact of the environmental policies, we start by reviewing the literature on the environment, technological knowledge and economic growth. Then, we build a general equilibrium endogenous growth model where final goods are produced either in the skilled-labour intensive Clean sector or in the unskilled-labour intensive Unclean sector. By solving numerically transitional dynamics towards the unique and stable steady state, we observe that environmental policies encourage scale-invariant technologicalknowledge bias. This, in turn, promotes environmental quality, the skill premium and economic growth. Moreover, the impact of population growth on the steady-state growth rate is higher under strong households’ environmental conscientiousness with future generations.

Suggested Citation

  • Oscar Afonso & Ana Catarina Afonso, 2015. "Endogenous Growth Effects of Environmental Policies," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 62(5), pages 607-629, December.
  • Handle: RePEc:voj:journl:v:62:y:2015:i:5:p:607-629
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    References listed on IDEAS

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    More about this item

    Keywords

    (Un)Clean sector; Environmental policies; Environmental conscientiousness; Growth; Wages;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • 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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