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Environment and Economic Growth: Is Technical Change the Key to Decoupling?

Author

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  • Marzio Galeotti

    (Università di Milano and Fondazione Eni Enrico Mattei)

Abstract

The relationship between economic growth and pollution is very complex, depending upon a host of different factors. Thus the study of this phenomenon represents a challenging endeavor. While most economics papers begin with theory and support that theory with econometric evidence, the literature on Environmental Kuznets Curves has proceeded in the opposite direction: first developing an empirical observation about the world, and then attempting to supply appropriate theories. A number of papers have aimed at providing the theoretical underpinnings to the Environmental Kuznets Curve. Prominent here is the class of optimal growth models. These are usually studied from the point of view of the analytical conditions that must hold in order to obtain an inverted-U functional relationship between pollution and growth. These models are however seldom confronted with the data. In this paper we take one popular optimal growth model designed for climate change policy analysis and carry out a few simulation exercises with the purpose of characterizing the relationship between economic growth and emissions. In particular, we try to assess the relative contribution of the ingredients of the well-known decomposition of the environment-growth relationship put forth by Grossman (1995): according to it, the presumed inverted-U pattern results from the joint effect of scale, composition, and technology components. We do this focusing on the developed regions of the world and on a global pollutant, CO2 emissions.

Suggested Citation

  • Marzio Galeotti, 2003. "Environment and Economic Growth: Is Technical Change the Key to Decoupling?," Working Papers 2003.90, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.90
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    References listed on IDEAS

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    1. Bovenberg, A Lans & Smulders, Sjak A, 1996. "Transitional Impacts of Environmental Policy in an Endogenous Growth Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 861-893, November.
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    3. Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
    4. Marzio Galeotti & Alessandro Lanza, 1999. "Desperately Seeking (Environmental) Kuznets," Working Papers 1999.2, Fondazione Eni Enrico Mattei.
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    Cited by:

    1. Bagliani, Marco & Bravo, Giangiacomo & Dalmazzone, Silvana, 2008. "A consumption-based approach to environmental Kuznets curves using the ecological footprint indicator," Ecological Economics, Elsevier, vol. 65(3), pages 650-661, April.
    2. Valentina Bosetti, Carlo Carraro and Marzio Galeotti, 2006. "The Dynamics of Carbon and Energy Intensity in a Model of Endogenous Technical Change," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 191-206.
    3. Marzio Galeotti & Carlo Carraro, 2004. "Does Endogenous Technical Change Make a Difference in Climate Policy Analysis? A Robustness Exercise with the FEEM-RICE Model," Working Papers 2004.152, Fondazione Eni Enrico Mattei.
    4. repec:eee:rensus:v:76:y:2017:i:c:p:448-459 is not listed on IDEAS

    More about this item

    Keywords

    Climate Policy; Environmental Modeling; Integrated Assessment; Technical Change;

    JEL classification:

    • H0 - Public Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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