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Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies

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  • Guilherme de Oliveira

Abstract

The study presents a simple extension of a Harrodian model, that explores, the relationship between the environment and economic growth in a hypothetical dual low-income economy with relatively low levels of environmental quality. It is supposed that the rise in effective demand increases the flow of negative externalities on the environment, which, in turn, would affect output expansion negatively in the capitalist sector through the occurrence of environmental adjustment costs. From such conflictual dynamics, the model shows that perpetual vicious circles may characterize the pattern of fluctuations in economic activity in this economy.

Suggested Citation

  • Guilherme de Oliveira, 2018. "Environment, Effective Demand, and Cyclical Growth in Surplus Labor Economies," PSL Quarterly Review, Economia civile, vol. 71(285), pages 183-201.
  • Handle: RePEc:psl:pslqrr:2018:24
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    References listed on IDEAS

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    1. Skott,Peter, 2008. "Conflict and Effective Demand in Economic Growth," Cambridge Books, Cambridge University Press, number 9780521066310, January.
    2. Currie, Janet & Stabile, Mark, 2006. "Child mental health and human capital accumulation: The case of ADHD," Journal of Health Economics, Elsevier, vol. 25(6), pages 1094-1118, November.
    3. Bulte, Erwin H. & van Soest, Daan P., 2001. "Environmental degradation in developing countries: households and the (reverse) Environmental Kuznets Curve," Journal of Development Economics, Elsevier, vol. 65(1), pages 225-235, June.
    4. Dasgupta, Susmita & Deichmann, Uwe & Meisner, Craig & Wheeler, David, 2005. "Where is the Poverty-Environment Nexus? Evidence from Cambodia, Lao PDR, and Vietnam," World Development, Elsevier, vol. 33(4), pages 617-638, April.
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    More about this item

    Keywords

    Environmental quality; Effective demand; Cyclical growth; Dual economies;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • 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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