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Global warming in a basic endogenous growth model

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  • Alfred Greiner

    (Bielefeld University)

Abstract

This article studies the relation between anthropogenic global warming and economic growth. It is assumed that deviations from the preindustrial average global surface temperature negatively affect aggregate output and utility. The government levies a tax on output and a tax on greenhouse gases. Assuming a basic endogenous growth model, the effects of varying the tax rates are analyzed as concerns economic growth, economic welfare, and the rise in average global surface temperature. Using simulations, it is demonstrated that higher emission taxes may raise economic growth and welfare while reducing the extent of global warming. In addition, situations exist where a rise in emission taxes reduces economic growth but raises welfare. Furthermore, the social optimum economies with cleaner technologies have fewer emissions than economies with fewer clean production technologies.

Suggested Citation

  • Alfred Greiner, 2004. "Global warming in a basic endogenous growth model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(1), pages 49-73, March.
    • Handle: RePEc:spr:envpol:v:6:y:2004:i:1:d:10.1007_bf03353930
    DOI: 10.1007/BF03353930
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    References listed on IDEAS

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    More about this item

    Keywords

    Global warming; Greenhouse gases; Emission tax; Balanced growth path; JEL: E60; 041; Q28;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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