Uniqueness and Indeterminacy of Equilibria in a Model with Polluting Emissions

Abstract

Is pollution a dirty word? To answer this question we develop an endogenous growth model a la Rebelo (1991) where dirtiness becomes a fundamental choice variable for the economy to grow. Conclusions to our analysis say that a positive sustainable economic growth is attainable only if polluting production activities are taken into account. Moreover, transitional dynamics points out that local stability and uniqueness of equilibria are also achieved.