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Abstract ▼ AI-Helper

This theoretical model makes three contributions to the study on economic growth and environment. First, emissions are generated during final goods production and technology accumulation. Second, this paper assumes that pollution is directly increasing with increase in final goods output or in consu...

This theoretical model makes three contributions to the study on economic growth and environment. First, emissions are generated during final goods production and technology accumulation. Second, this paper assumes that pollution is directly increasing with increase in final goods output or in consumption. Third, we use reproducible factors associated with labor and capital input in production function and assume constant return to scale in reproducible factors. From growth rate condition we derived, increases in reproducible factors, increases in productivity of either the abatment or technology sector, and decrease in social discount rate would increase the sustainable growth rate. In empirical test, the environmental degradation did not effect the economic growth rate though other factors satisfied the growth rate condition equation. However, through the reinterpretation of this result, we found indirectly the fact of that an inverted U relationship between air pollution and economic growth rate would exist in 20 OECD countries using a panel data for the period of 1986~1995.

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