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Technological Progress, Time Perception and Environmental Sustainability

Listed author(s):
  • Evangelos V. Dioikitopoulos

    ()

    (Department of Management, King's College London)

  • Sugata Ghosh

    ()

    (Department of Economics amd Finanace, Brunel University London)

  • Eugenia Vella

    ()

    (Department of Economics, University of Sheffield)

This paper explores the relationship among technological progress, environment and growth by combining endogenous efficiency of public abatement with endogenous discounting. Our model can feature two different balanced growth paths corresponding to different levels of environmental quality, which remains constant in the long-run although the economy grows. The multiple equilibria point to a non-monotonic relationship among technological progress, growth and the environment, as observed in the data. A Ramsey planner can implement the good equilibrium; however, under a positive technology shock, the economy achieves higher long-run growth at the cost of lower environmental quality (even if agents value the environment highly). This finding could help us explain why some advanced economies may not succeed in cleaning the environment effectively.

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File URL: http://www.sheffield.ac.uk/economics/research/serps/articles/2016_002
File Function: First version, January 2016
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2016002.

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Length: 31 pages
Date of creation: 2016
Handle: RePEc:shf:wpaper:2016002
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