The Green Solow Model

61 Pages Posted: 19 Jul 2004 Last revised: 13 Jun 2014

See all articles by William A. Brock

William A. Brock

University of Wisconsin, Madison - Department of Economics; University of Missouri at Columbia - Department of Economics

M. Scott Taylor

University of Calgary - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: June 2004

Abstract

We demonstrate that a key empirical finding in environmental economics - The Environmental Kuznets Curve - and the core model of modern macroeconomics - the Solow model - are intimately related. Once we amend the Solow model to incorporate technological progress in abatement, the EKC is a necessary by product of convergence to a sustainable growth path. Our amended model, which we dub the Green Solow', generates an EKC relationship between both the flow of pollution emissions and income per capita, and the stock of environmental quality and income per capita. The resulting EKC may be humped shaped or strictly declining. We explain why current methods for estimating an EKC are likely to fail whenever they fail to account for cross-country heterogeneity in either initial conditions or deep parameters. We then develop an alternative empirical method closely related to tests of income convergence employed in the macro literature. Preliminary tests of the model's predictions are investigated using data from OECD countries.

Suggested Citation

Brock, William A. and Taylor, Michael Scott, The Green Solow Model (June 2004). NBER Working Paper No. w10557. Available at SSRN: https://ssrn.com/abstract=557190

William A. Brock

University of Wisconsin, Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-6655 (Phone)
608-263-3876 (Fax)

University of Missouri at Columbia - Department of Economics ( email )

118 Professional Building
Columbia, MO 65211
United States

Michael Scott Taylor (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
68
Abstract Views
1,745
rank
49,029
PlumX Metrics