Economic Growth and Environmental Policy A Theoretical Approach

About this book

The use of dynamic models to address the problems of environmental degradation is central to environmental policy because decisions taken now affect not only the current generation but have a profound impact on the future. In this book, Frank Hettich uses dynamic modelling to study the interactions between economic growth, environmental policy and tax reform. He incorporates pollution and abatement technologies into different endogenous growth models that take into account consumer preferences and physical and human capital accumulation. He focuses on the effects of environmental policy in closed and open economies in the short, medium and long term. He sheds light on: what kind of environmental policy can reverse tendencies towards increasing pollution?; will tighter environmental policy inevitably reduce economic growth?; does environmental taxation provide an efficient source of revenue for governments?; how will higher preferences for a clean environment affect optimal growth rates?; what are the effects of international cooperation on growth, welfare and pollution?; and does sustainable environmental development necessarily preclude economic growth? This book should interest all students and scholars of environmental economics and particularly those interested in the relationship between economic growth and environmental quality.

Contents

Part 1 Introduction: motivation; structure of the study. Part 2 Survey of literature and general model setup: modelling the environment; environmental policy in models of exogenous growth; environmental policy in models of endogenous growth; transitional dynamics. Part 3 Environmental policy in the linear growth model: the basic linear model; the linear model with pollution; the linear model with pollution and abatement; the open economy; summary of the results. Part 4 Environmental policy in the Uzawa-Lucas model: the closed economy; the simulation of the transition path; the open economy; summary of the results. Part 5 Environmental policy in the Uzawa-Lucas model with leisure: the analytical framework; results along a balanced growth path; final output as the polluting factor; summary of the results. Part 6 Environmental policy in the generalized Uzawa-Lucas model: the analytical framework; effects along a balanced growth path; physical capital as the polluting factor; summary of the results. Part 7 Summary and outlook: results of the study; research agenda; policy recommendations; technical appendix.

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