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Sustainable economic development and the environment: Theory and evidence

  • Luisito Bertinelli

    ()

    (CREA, Université du Luxembourg)

  • Eric Strobl

    ()

    (Ecole Polytechnique Paris)

  • Benteng Zou

    ()

    (Institute of Mathematical Economics, Bielefeld University)

The relationship between growth and pollution is studied through a vintage capital model, where new technology is more environmentally friendly. We find that once the optimal scrapping age of technologies is reached, an economy may achieve two possible cases of sustainable development, one in which pollution falls and another in which it stabilizes, or a catastrophic outcome, where environmental quality reaches its lower bound. The outcome will depend on countries' investment path and their propensity to innovate in environmentally clean technologies, both of which are likely to differ across economies. Empirical results using long time series for a number of developed and developing countries indeed confirm heterogenous experiences in the pollution-output relationship.

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Paper provided by Center for Mathematical Economics, Bielefeld University in its series Center for Mathematical Economics Working Papers with number 369.

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Length: 33 pages
Date of creation: Jul 2005
Date of revision:
Handle: RePEc:bie:wpaper:369
Contact details of provider: Postal: Postfach 10 01 31, 33501 Bielefeld
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Web page: http://www.imw.uni-bielefeld.de/

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