Channels of Transmission of Environmental Policy to Economic Growth: A Survey of the Theory

34 Pages Posted: 24 May 2004

See all articles by Francesco Ricci

Francesco Ricci

University of Cergy-Pontoise - THEMA

Date Written: March 2004

Abstract

Economists generally hold that environmental regulations impose constraints on the production possibilities set and are therefore potentially harmful to economic growth. In recent years, however, it has been recognized that environmental regulation can enhance the prospects for growth if improved environmental quality increases the productivity of inputs or the efficiency of the education system. It is also held that environmental regulation promotes pollution abatement activity and can lead to the exploitation of increasing returns to scale in abatement. Furthermore, expectations of a better environment may encourage households to save. Finally, it has been conjectured that environmental regulations can stimulate innovation because R&D's a relatively clean activity and because the market share of clean innovations increases.

Keywords: Environmental policy, Endogenous growth

JEL Classification: Q280, O410, O130, H230

Suggested Citation

Ricci, Francesco, Channels of Transmission of Environmental Policy to Economic Growth: A Survey of the Theory (March 2004). Available at SSRN: https://ssrn.com/abstract=541104 or http://dx.doi.org/10.2139/ssrn.541104

Francesco Ricci (Contact Author)

University of Cergy-Pontoise - THEMA ( email )

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