Is growth bad for the environment? Pollution, abatement, and endogenous growth
The authors investigate the implications of pollution as a byproduct of production and analyze how environmental concern affects the optimal rate of economic growth and optimal government policy. The government must levy taxes on income to finance both productive government spending and abatement activities. It must levy an optimal tax. Too high a tax rate harms prospects for growth and too low a tax rate is bad for the environment. The authors distinguish between two approaches to incorporate the environment into the model stock approach and the flow approach. The flow approach assumes that the level of environmental quality changes instantly if production or abatement levels change (this is relevant for analyzing externalities associated, for example, with noise). The stock approach assumes that pollution and abatement indirectly influence the environment by affecting the rate of change in the environment over time (this is more relevant for analyzing problems of acid rain). They conclude that: win-win situations (in which improvements in economic growth and environmental quality go hand in hand) cannot arise under the flow approach, but can arise under the stock approach - if and only if the intertemporal elasticity of substitution exceeds unity; and maximizing the economy's growth rate is never optimal unless consumers care nothing about the environment.
|Date of creation:||31 Jul 1993|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Becker, Robert A., 1982. "Intergenerational equity: The capital-environment trade-off," Journal of Environmental Economics and Management, Elsevier, vol. 9(2), pages 165-185, June.
- Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
- Gruver, Gene W., 1976. "Optimal investment in pollution control capital in a neoclassical growth context," Journal of Environmental Economics and Management, Elsevier, vol. 3(3), pages 165-177, October.
- Barro, Robert J, 1990.
"Government Spending in a Simple Model of Endogenous Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 98(5), pages S103-26, October.
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Robert J. Barro, 1988. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Withagen, Cees, 1994. "Pollution and exhaustibility of fossil fuels," Resource and Energy Economics, Elsevier, vol. 16(3), pages 235-242, August.
- Aghion, P. & Howitt, P., 1989.
"A Model Of Growth Through Creative Destruction,"
527, Massachusetts Institute of Technology (MIT), Department of Economics.
- Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers 8904, University of Western Ontario, Department of Economics.
- Philippe Aghion & Peter Howitt, 1990. "A Model of Growth Through Creative Destruction," NBER Working Papers 3223, National Bureau of Economic Research, Inc.
- Aghion, P. & Howitt, P., 1990. "A Model Of Growth Through Creative Destruction," DELTA Working Papers 90-12, DELTA (Ecole normale supérieure).
- Bovenberg, A.L. & van der Ploeg, F., 1992.
"Environmental policy, public finance and the labour market in a second-best world,"
1992-43, Tilburg University, Center for Economic Research.
- Bovenberg, A. L. & van der Ploeg, F., 1994. "Environmental policy, public finance and the labour market in a second-best world," Journal of Public Economics, Elsevier, vol. 55(3), pages 349-390, November.
- Bovenberg, A.L. & Van Der Ploeg, F., 1992. "Environmental Policy, Public Finance and the Labour Market in a Second- Best World," Papers 9243, Tilburg - Center for Economic Research.
- Bovenberg, A Lans & van der Ploeg, Frederick, 1992. "Environmental Policy, Public Finance and the Labour Market in a Second-best World," CEPR Discussion Papers 745, C.E.P.R. Discussion Papers.
- repec:ner:tilbur:urn:nbn:nl:ui:12-3107039 is not listed on IDEAS
- Oates, Wallace E. & Schwab, Robert M., 1988. "Economic competition among jurisdictions: efficiency enhancing or distortion inducing?," Journal of Public Economics, Elsevier, vol. 35(3), pages 333-354, April.
- repec:dgr:kubcen:199243 is not listed on IDEAS
- Frederick Ploeg & Cees Withagen, 1991. "Pollution control and the Ramsey problem," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 1(2), pages 215-236, June.
- van der Ploeg, Frederick, 1992. "Temporal risk aversion, intertemporal substitution and Keynesian propensities to consume," Economics Letters, Elsevier, vol. 39(4), pages 479-484, August.
- King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : I. The basic neoclassical model," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 195-232.
- Van Der Ploeg, F. & De Zeeuw, A.J., 1990.
"International Aspects Of Pollution Control,"
9065, Tilburg - Center for Economic Research.
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- Alogoskoufis, George & van der Ploeg, Frederick, 1990. "On Budgetary Policies and Economic Growth," CEPR Discussion Papers 496, C.E.P.R. Discussion Papers.
- Keeler, Emmett & Spence, Michael & Zeckhauser, Richard, 1972. "The optimal control of pollution," Journal of Economic Theory, Elsevier, vol. 4(1), pages 19-34, February.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:1151. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.