Environmental Policy and Directed Technical Change in a Global Economy: The Dynamic Impact of Unilateral Environmental Policies

62 Pages Posted: 14 Nov 2013

Multiple version iconThere are 2 versions of this paper

Date Written: November 2013

Abstract

This paper builds a two-country (North, South), two-sector (polluting, nonpolluting) trade model with directed technical change, examining whether unilateral environmental policies can ensure sustainable growth. The polluting good is produced with a clean and a dirty input. I show that a temporary Northern policy combining clean research subsidies and a trade tax can ensure sustainable growth but Northern carbon taxes alone cannot. Trade and directed technical change accelerate environmental degradation either under laissez-faire or if the North implements carbon taxes, yet both help reduce environmental degradation under the appropriate unilateral policy. I characterize the optimal unilateral policy analytically and numerically using calibrated simulations.

Keywords: climate change, directed technical change, environment, innovation, trade, unilateral policy

JEL Classification: F18, F42, F43, O32, O33, O41, Q54, Q55

Suggested Citation

Hemous, David, Environmental Policy and Directed Technical Change in a Global Economy: The Dynamic Impact of Unilateral Environmental Policies (November 2013). CEPR Discussion Paper No. DP9733. Available at SSRN: https://ssrn.com/abstract=2353890

David Hemous (Contact Author)

University of Zürich ( email )

Zürich
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
497
PlumX Metrics