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Economic Growth and the Environment: Theory and Facts

  • Sherry Bartz

    (Department of Economics, University of Miami)

  • David L. Kelly

    ()

    (Department of Economics, University of Miami)

Several recent papers propose competing theoretical explanations for the empirical observation of an inverted U-shape relationship between enviromental degradation and per-capita income. We proprose the following test of the theory: calibrate a theoretical model to an already developed economy using information unrelated to the pollution-income curve. Then simulate the model starting from a less developed initial condition and compare the predicted pollutionincome relationship with that in the data. Our results are mixed. Some support exists for the theory that the inverted U-shape results from a corner solution in which less developed countries do not abate pollution. However, pollution peaks at a level of per capita income that is much lower than that observed in the U.S. data.

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File URL: http://moya.bus.miami.edu/~dkelly/papers/kcal4_24_06.pdf
File Function: First version, 2006
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Paper provided by University of Miami, Department of Economics in its series Working Papers with number 0601.

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Length: 41 pages
Date of creation: 2006
Date of revision:
Publication status: Forthcoming, accepted by the Resource and Energy Economics
Handle: RePEc:mia:wpaper:0601
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Web page: http://www.bus.miami.edu/faculty-and-research/academic-departments/economics/index.html

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