Inequality, Growth and the Environment: A Steady-State Analysis of the Kuznets Curve and the Environmental Kuznets Curve

U of Siena Dept. of Economics Working Paper No. 290

29 Pages Posted: 9 Aug 2000

See all articles by Simone Borghesi

Simone Borghesi

University of Siena - Dept. of Political and International Sciences; European University Institute

Date Written: June 2000

Abstract

The literature on the Kuznets curve and that on the environmental Kuznets curve share several features. The analogy between the two curves concerns not only their shape, but also the theoretical explanations underlying them and the methodology used in the empirical studies. Although the evidence in favor of the curves is not clear-cut, both relationships are the object of a long-lasting debate in the literature for their large policy implications. This works intends to contribute to such debate by investigating what might happen in equilibrium if we assume that both relationships apply. In particular, taking the two curves as stylized facts of the economy, this paper examines possible implications of these empirical regularities on the steady-state equilibrium of the economy. Using a very simple infinite-horizon representative agent model a la Ramsey, we show that three possible outcomes can occur: no steady-state, a unique locally unstable steady-state, and multiple steady-states, with only the high consumption steady-state being locally stable. When a steady-state does exist, stability analysis suggests that inequality across countries may tend to increase.

JEL Classification: C62, O13, O15

Suggested Citation

Borghesi, Simone, Inequality, Growth and the Environment: A Steady-State Analysis of the Kuznets Curve and the Environmental Kuznets Curve (June 2000). U of Siena Dept. of Economics Working Paper No. 290, Available at SSRN: https://ssrn.com/abstract=238780 or http://dx.doi.org/10.2139/ssrn.238780

Simone Borghesi (Contact Author)

University of Siena - Dept. of Political and International Sciences ( email )

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I-53100 Siena
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European University Institute ( email )

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133 via Bocaccio
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HOME PAGE: http://https://me.eui.eu/simone-borghesi

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