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Does the climate challenge justify degrowth?

Author

Listed:
  • Grimaud, André
  • Lafforgue, Gilles
  • Rougé, Luc

Abstract

Degrowth is often advocated as a response to the climate crisis, but its consistency with growth theory remains unclear. We develop an endogenous growth model of directed technical change and climate in which the economy relies on both a polluting fossil resource and a clean renewable alternative. We fully characterize the social optimum and show that accounting for climate damages may justify an initial phase of degrowth. Such a phase is more likely when fossil resources are abundant and fossil-oriented research is relatively inefficient. In all cases, long-run optimal growth remains positive.

Suggested Citation

  • Grimaud, André & Lafforgue, Gilles & Rougé, Luc, 2026. "Does the climate challenge justify degrowth?," TSE Working Papers 26-1748, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:131735
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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