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Environmental pollution in a growing economy with endogenous structural change

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  • Bondarev, Anton
  • Greiner, Alfred

Abstract

In this paper we study the impact of environmental pollution in an endogenous growth model that allows for structural change. The model is based on doublydifffferentiated R&D where newer, less polluting technologies gradually replace older ones. The analysis shows that the presence of environmental externalities stimulates structural change but reduces the growth rate of the economy. Further, comparing the models with and without structural change demonstrates that the latter implies stronger environmental damages and, consequently, a lower growth rate than the ffirst one. Finally, levying a tax on the polluting output speeds up structural change, thus, reducing environmental pollution and spurring economic growth. This can give new support for the double dividend hypothesis.

Suggested Citation

  • Bondarev, Anton & Greiner, Alfred, 2017. "Environmental pollution in a growing economy with endogenous structural change," Working papers 2017/03, Faculty of Business and Economics - University of Basel.
    • Handle: RePEc:bsl:wpaper:2017/03
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    References listed on IDEAS

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    1. Thierry Bréchet & Carmen Camacho & Vladimir Veliov, 2014. "Model predictive control, the economy, and the issue of global warming," Annals of Operations Research, Springer, vol. 220(1), pages 25-48, September.
    2. Bondarev, Anton & Greiner, Alfred, 2019. "Endogenous Growth And Structural Change Through Vertical And Horizontal Innovations," Macroeconomic Dynamics, Cambridge University Press, vol. 23(1), pages 52-79, January.
    3. Greiner, Alfred, 2005. "Anthropogenic climate change and abatement in a multi-region world with endogenous growth," Ecological Economics, Elsevier, vol. 55(2), pages 224-234, November.
    4. Lans Bovenberg, A. & Smulders, Sjak, 1995. "Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model," Journal of Public Economics, Elsevier, vol. 57(3), pages 369-391, July.
    5. Greiner, Alfred & Semmler, Willi (ed.), 2008. "The Global Environment, Natural Resources, and Economic Growth," OUP Catalogue, Oxford University Press, number 9780195328233.
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    Keywords

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    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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