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Pollution Abatement as a Source of Stabilisation and Long-Run Growth

  • Theodore Palivos
  • Dimitrios Varvarigos


In a two-period overlapping generations model with production, we consider the damaging impact of environmental degradation on health and, consequently, life expectancy. The government’s involvement on policies of environmental preservation proves crucial for both the economy’s short-term dynamics and its long-term prospects. Particularly, an active policy of pollution abatement emerges as an important engine of long-run economic growth. Furthermore, by eliminating the occurrence of limit cycles, pollution abatement is also a powerful source of stabilisation.

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Paper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 11/04.

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Date of creation: Oct 2010
Date of revision: Oct 2010
Handle: RePEc:lec:leecon:11/04
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