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Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term

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  • Pascal da Costa

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

Abstract

Literature on endogenous growth shows that a polluting economy can grow sustainably and that a double-dividend or win-win effect comprising growth and the environment is possible. Even with a semi- endogenous growth approach, which occur when the knowledge stock yield falls below the unit in the production of innovations, what happens to sustainability and the double dividend? This paper presents the first semi-endogenous growth model with pollution which answers this very question. We first illustrate that the dynamics of this economy can be sustainable even if its long-term growth rate is exogenous. To ensure the latter, a knowledge stock yield that is greater than a certain strictly positive threshold is required. We then demonstrate that the double dividend is impossible since the level of support for innovation no longer has a positive impact on the long-term growth rate. And the environmental policy always has a negative effect on growth.

Suggested Citation

  • Pascal da Costa, 2014. "Semi-Endogenous Growth and Pollution: No Double Dividend in the Long Term," Working Papers hal-00994904, HAL.
    • Handle: RePEc:hal:wpaper:hal-00994904
    Note: View the original document on HAL open archive server: https://hal.science/hal-00994904
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    References listed on IDEAS

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    1. Francesco Ricci, 2007. "Channels of transmission of environmental policy to economic growth," Post-Print hal-03062228, HAL.
    2. Grimaud, Andre, 1999. "Pollution Permits and Sustainable Growth in a Schumpeterian Model," Journal of Environmental Economics and Management, Elsevier, vol. 38(3), pages 249-266, November.
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    7. Ricci, Francesco, 2007. "Channels of transmission of environmental policy to economic growth: A survey of the theory," Ecological Economics, Elsevier, vol. 60(4), pages 688-699, February.
    8. Andre'' Grimaud & Francesco Ricci, 1999. "The Growth-Environment Trade-off: Horizontal vs Vertical Innovations," Working Papers 1999.34, Fondazione Eni Enrico Mattei.
    9. Segerstrom, Paul S, 1998. "Endogenous Growth without Scale Effects," American Economic Review, American Economic Association, vol. 88(5), pages 1290-1310, December.
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    Keywords

    Croissance semi-endogène; Double-dividende; Innovation; Pollution; Semi-Endogenous Growth; Double Dividend;
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