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Green Technology Adoption and the Business Cycle

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  • Jean-Marc Bourgeon
  • Margot Hovsepian

Abstract

We analyze the adoption of green technology in a dynamic economy affected by random shocks where demand spillovers are the main driver of technological improvements. Firms’ beliefs and consumers’ anticipations drive the path of the economy. We derive the optimal policy of investment subsidy and the expected time and likelihood of reaching a targeted level of environmental quality under economic uncertainty. This allows us to estimate the value that should be given to the environment in order to avoid an environmental catastrophe as a function of the strength of spillover effects.

Suggested Citation

  • Jean-Marc Bourgeon & Margot Hovsepian, 2017. "Green Technology Adoption and the Business Cycle," CESifo Working Paper Series 6485, CESifo.
    • Handle: RePEc:ces:ceswps:_6485
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    More about this item

    Keywords

    growth; sustainability; uncertainty;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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