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The Transition from the Neoclassical Growth Model to Ecology

  • Schlauch, Michael
  • Palmisano, Gaia
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    This paper examines the assumptions and conclusions of the neoclassical growth model put forth by Solow and many others. We investigate the origins of the paradigm of unlimited growth and technological progress and question their plausibility. In contrast, we develop a modified version of the neoclassi- cal growth model where we consider non-human, environmental resources such as energy as an additional input factor and recognize their limited ca- pacity to recover from human impact. Surprisingly, the same mathematical framework of the neoclassical growth model gets to the opposite conclusions - namely that long term growth cannot exceed a level in which nature begins to deplete. Growth further that level as we might experience today leads to natural and economic disaster. Technological progress understood as produc- tivity increase can only delay but not prevent this crisis. We compare these conclusions to the opposite hypothesis of the Environmental Kuznets Curve. Also we show how this model can lead to a greater understanding of present or future observations that are connected to environmental deficiency, such as social divergence and stagnating life satisfaction in developed countries.

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    File URL: http://mpra.ub.uni-muenchen.de/45867/1/MPRA_paper_45867.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 45867.

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    Date of creation: 05 Apr 2013
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    Handle: RePEc:pra:mprapa:45867
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    1. Perman, Roger & Stern, David I., 2003. "Evidence from panel unit root and cointegration tests that the Environmental Kuznets Curve does not exist," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(3), September.
    2. Cole, M.A. & Rayner, A.J. & Bates, J.M., 1997. "The environmental Kuznets curve: an empirical analysis," Environment and Development Economics, Cambridge University Press, vol. 2(04), pages 401-416, November.
    3. Mota, Rui Pedro & Dias, João, 2006. "Determinants of CO2 emissions in open economies: testing the environmental Kuznets curve hypothesis (1970-2000)," MPRA Paper 13342, University Library of Munich, Germany.
    4. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
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