Environmental Pollution in a Growing Economy with Endogenous Structural Change

32 Pages Posted: 5 Jun 2014 Last revised: 7 Feb 2017

Anton A. Bondarev

WWZ Universit├Ąt Basel

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics

Date Written: June 1, 2014

Abstract

In this paper we study the impact of environmental pollution in an endogenous growth model with endogenous structural change. The paper allows for both horizontal and vertical innovations where newer technologies are less polluting compared to older ones. The analysis shows that the presence of environmental externalities stimulates structural change but reduces the growth rate of the economy. Further, comparing the models with and without structural change demonstrates that the latter implies stronger environmental damages and, consequently, a lower growth rate than the first one. Finally, levying a tax on the polluting output speeds up structural change, thus, reducing environmental pollution and spurring economic growth.

Keywords: Environmental Damages, Endogenous Growth, Creative Destruction, Endogenous Structural Change

JEL Classification: Q55, O31, O44

Suggested Citation

Bondarev, Anton A. and Greiner, Alfred, Environmental Pollution in a Growing Economy with Endogenous Structural Change (June 1, 2014). Bielefeld Working Papers in Economics and Management No. 07-2014. Available at SSRN: https://ssrn.com/abstract=2445867 or http://dx.doi.org/10.2139/ssrn.2445867

Anton A. Bondarev (Contact Author)

WWZ Universit├Ąt Basel ( email )

Basel, 4051
Switzerland

Alfred Greiner

Bielefeld University - Department of Business Administration and Economics ( email )

P.O. Box 100131
Bielefeld, 33501
Germany
+49 521 106 4859 (Phone)
+49 521 106 67120 (Fax)

HOME PAGE: http://phoenix.wiwi.uni-bielefeld.de/lehrbereiche/vwl/wipol

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