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Neoclassical Growth, Environment and Technological Change: The Environmental Kuznets Curve

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  • Rubio, S.J.
  • Garcia, J.R.
  • Hueso, J.L.

Abstract

The paper investigates socially optimal patterns of economic growth and environmental quality in a neoclassical growth model with endogenous technological progress. In the model, the environmental quality affects positively not only to utility but also to production. However, cleaner technologies can be used in the economy whether a part of the output is used in environmentally oriented R&D. In this framework, if the initial level of capital is low then the shadow price of a cleaner technology is low relative to the cost of developing it given by the marginal utility of consumption and it is not worth investing in R&D. Thus, there will be a first stage of growth based only on the accumulation of capital with a decreasing environmental quality until the moment that pollution is great enough to make profitable the investment in R&D. After this turning point, if the new technologies are efficient enough, the economy can evolve along a balanced growth path with an increasing environmental quality. The result is that the optimal investment pattern supports an environmental Kuznets curve.

Suggested Citation

  • Rubio, S.J. & Garcia, J.R. & Hueso, J.L., 2009. "Neoclassical Growth, Environment and Technological Change: The Environmental Kuznets Curve," Sustainable Development Papers 56221, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemdp:56221
    DOI: 10.22004/ag.econ.56221
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    Cited by:

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    2. Lokonon Boris Odilon Kounagbè & Adeleke Oluwole Salami, 2017. "Working Paper 269 - Climate Change and Renewable Energy Generation in Africa," Working Paper Series 2386, African Development Bank.
    3. Jin, Wei & Zhang, ZhongXiang, 2014. "From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy," Energy: Resources and Markets 190757, Fondazione Eni Enrico Mattei (FEEM).
    4. Jin, Wei & Zhang, ZhongXiang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation," Working Papers 249494, Australian National University, Centre for Climate Economics & Policy.
    5. Wei Jin & ZhongXiang Zhang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation in China's Economic Growth," CCEP Working Papers 1412, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    6. Jin, Wei & Shi, Xunpeng & Zhang, Lin, 2021. "Energy transition without dirty capital stranding," Energy Economics, Elsevier, vol. 102(C).
    7. Carlo Orecchia & Maria Elisabetta Tessitore, 2011. "Economic Growth and the Environment with Clean and Dirty Consumption," Working Papers 2011.57, Fondazione Eni Enrico Mattei.
    8. Abdulla, Eman & Lim, King Yoong & Morris, Diego & Saliba, Faten, 2022. "Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence," The Warwick Economics Research Paper Series (TWERPS) 1429, University of Warwick, Department of Economics.
    9. Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.
    10. Jaime Alonso-Carrera & Carlos Miguel & Baltasar Manzano, 2019. "Economic Growth and Environmental Degradation When Preferences are Non-homothetic," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1011-1036, November.

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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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