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Pollution, Human Capital, and Growth Cycles

In: Creative Complex Systems

Author

Listed:
  • Takuma Kunieda

    (School of Economics, Kwansei Gakuin University)

  • Kazuo Nishimura

    (Kobe University)

Abstract

To investigate the growth effect of pollutionPollution, we apply an optimal growth framework in which human and physical capitalPhysical capital accumulation are two growth engines. PollutionPollution is emitted from the stock of physical capitalPhysical capital and has a negative impact on the formation of human capitalHuman capital. In this simple growth model, sustainable endogenous growthEndogenous growth never occurs and a unique steady stateSteady state emerges because of the negative impact of pollutionPollution. The model shows that (i) if the extent of the external effectExternal effect of pollutionPollution is relatively small, the steady stateSteady state is stable and the economy starting in the neighborhood of the steady stateSteady state converges to it; (ii) if the extent of the external effectExternal effect is relatively large, the steady stateSteady state is unstable and the economy diverges away from it; and (iii) a Hopf bifurcationHopf bifurcation occurs at a certain intermediate extent of the external effectExternal effect. The numerical analysisNumerical analysis illustrates the global dynamic behavior in which the economy exhibits a closed orbitClosed orbit as sufficient time passes if the steady stateSteady state is unstable.

Suggested Citation

  • Takuma Kunieda & Kazuo Nishimura, 2021. "Pollution, Human Capital, and Growth Cycles," Creative Economy, in: Kazuo Nishimura & Masatoshi Murase & Kazuyoshi Yoshimura (ed.), Creative Complex Systems, chapter 0, pages 85-99, Springer.
  • Handle: RePEc:spr:crechp:978-981-16-4457-3_6
    DOI: 10.1007/978-981-16-4457-3_6
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    More about this item

    Keywords

    Pollution; Human capital; Hopf bifurcation; Limit cycle; Endogenous business cycles;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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