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The Dynamics of Wealth, Environment and Land Value in a Three-Sector Growth Model

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  • Wei-Bin Zhang

    (Ritsumeikan Asia Pacific University, Japan)

Abstract

This study builds a three-sector growth model with endogenous wealth accumulation and environmental change. It deals with dynamics of land value and rent in tandem with economic growth and economic structural change. The economy consists of industrial, agricultural and environmental sectors. The land is used by the agricultural sector and for providing housing services. The model is based on the neoclassical growth theory and Ricardian theory. The household's decision is modeled with an alternative approach proposed by Zhang (1993). After building the model, we simulate the motion of the economy. We demonstrate that the economic system has a unique, stable, steady state. We also conduct comparative dynamic analysis. We demonstrate how exogenous changes in the environmental sector's productivity, the population, and the tax rates affect the consumption level of the industrial goods, the output level of the industrial sector, the rent income, the consumption of housing during transitory processes and in long-term equilibrium.

Suggested Citation

  • Wei-Bin Zhang, 2015. "The Dynamics of Wealth, Environment and Land Value in a Three-Sector Growth Model," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 13(2), pages 197-228.
    • Handle: RePEc:seb:journl:v:13:y:2015:i:2:p:197-228
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    More about this item

    Keywords

    Land Value and Rent; Environment; Taxes; Wealth Accumulation; Economic Structure;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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