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Economic Growth and the Environment: A Theoretical Reappraisal

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Listed:
  • Maxime Menuet
  • Alexandru Minea
  • Patrick Villieu
  • Anastasios Xepapadeas

Abstract

The relationship between economic growth and the environment is at the core of the theoretical and empirical researches since at least thirty years. This paper shows that a small-dimension ecological growth model can lead to a great diversity of relationships between pollution and growth, including the popular environmental Kuznets curve (EKC) and logistic curve (ELC). We exhibit multiple equilibria and complex local and global dynamics resulting in potential indeterminacy or long-lasting pollution cycles. Furthermore, our model reveals an ecological poverty trap associated with a possible irreversibility of the environmental degradation. Interestingly, our findings do not resort on some exogenous technological breaks but result from the endogenous interaction between households� saving behaviour and the natural resources' law of motion.

Suggested Citation

  • Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:2031
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    More about this item

    Keywords

    Growth; Environment; Bifurcation; Endogenous Cycles; Poverty Traps; Pollution;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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