Abstract
ABSTRACT We investigate the effect of environmental policy on economic growth by using an R&D-based growth model with endogenous labour supply and conducting a numerical analysis. The model brings together two channels for substituting polluting capital inputs: A static channel and a dynamic channel. A decrease in pollution permit levels indicates a direct effect on reducing growth rate and an indirect effect on rising growth rate via the two channels. Under the assumed functional forms of abatement and production technologies, the indirect effect dominates the direct effect at equilibrium. Thus, the policy can raise growth rate and improve welfare.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
