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A comment on innovation in "The environment and directed technical change"

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  • Anthony Wiskich

Abstract

The framework used to endogenise technology growth by Acemoglu, Aghion, Bursztyn, and Hemous (2012), hereafter AABH, allows the existence of unstable equilibria and does not provide a rationale for specifying which equilibrium should apply when more than one exists. This paper: (i) suggests a rationale for choosing one corner solution used in AABH that constitutes a lower bound for the subsidy or tax required to direct clean research; (ii) argues against use of the other corner solution; and (iii) provides an alternative equilibrium that constitutes an upper bound to the policy required. The alternative methods can produce substantially different results when the elasticity of substitution between clean and dirty inputs is high.

Suggested Citation

  • Anthony Wiskich, 2019. "A comment on innovation in "The environment and directed technical change"," CAMA Working Papers 2019-71, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2019-71
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    File URL: https://cama.crawford.anu.edu.au/sites/default/files/publication/cama_crawford_anu_edu_au/2019-12/71_2019_wiskich.pdf
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    More about this item

    Keywords

    Climate change; directed technical change; innovation policy;
    All these keywords.

    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
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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