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Optimal Environmental Protection and Environmental Kuznets Curve

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  • Vladimir K. Teles
  • Ronaldo A. Arraes

Abstract

This paper explores the link between an environmental policy and economic growth employing an extension of the Neoclassical Growth Model. We include a state equation to renewable natural resources, and consider natural resources as a component of the aggregate productivity. It is assumed that the change of the environmental regulations induces costs and that economic agents also derive some utility from stock capital accumulation via-a-vis environment. Using the Hopf bifurcation theorem, it can be shown that cyclical environmental policy strategies are optimal, providing a theoretical support to the Environmental Kuznets Curve

Suggested Citation

  • Vladimir K. Teles & Ronaldo A. Arraes, 2004. "Optimal Environmental Protection and Environmental Kuznets Curve," Econometric Society 2004 Latin American Meetings 60, Econometric Society.
    • Handle: RePEc:ecm:latm04:60
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    References listed on IDEAS

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    6. Margulis, Sergio, 1992. "Back of the envelope estimates of environmental damage costs in Mexico," Policy Research Working Paper Series 824, The World Bank.
    7. Clark, Colin W., 1996. "Operational environmental policies," Environment and Development Economics, Cambridge University Press, vol. 1(1), pages 110-113, February.
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    More about this item

    Keywords

    Neoclassical Growth Model; Environmental Kuznets Curve; Hopf Bifurcation Theorem; Limit Cycles.;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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