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Technological Progress, Time Perception and Environmental Sustainability

Author

Listed:
  • Evangelos V. Dioikitopoulos

    (Department of Management, King's College London)

  • Sugata Ghosh

    (Department of Economics amd Finanace, Brunel University London)

  • Eugenia Vella

    (Department of Economics, University of Sheffield)

Abstract

This paper explores the relationship among technological progress, environment and growth by combining endogenous efficiency of public abatement with endogenous discounting. Our model can feature two different balanced growth paths corresponding to different levels of environmental quality, which remains constant in the long-run although the economy grows. The multiple equilibria point to a non-monotonic relationship among technological progress, growth and the environment, as observed in the data. A Ramsey planner can implement the good equilibrium; however, under a positive technology shock, the economy achieves higher long-run growth at the cost of lower environmental quality (even if agents value the environment highly). This finding could help us explain why some advanced economies may not succeed in cleaning the environment effectively.

Suggested Citation

  • Evangelos V. Dioikitopoulos & Sugata Ghosh & Eugenia Vella, 2016. "Technological Progress, Time Perception and Environmental Sustainability," Working Papers 2016002, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2016002
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    File URL: http://www.sheffield.ac.uk/economics/research/serps/articles/2016_002
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    2. Xu, Wenli & Xu, Kun & Lu, Hongyou, 2016. "Environmental Policy and China’s Macroeconomic Dynamics Under Uncertainty---Based on The NK Model with Distortionary Taxation," MPRA Paper 71314, University Library of Munich, Germany.

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    More about this item

    Keywords

    Time preference; growth; environmental quality; Fiscal policy; technological progress;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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