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Neoclassical Growth, Environment and Technological Change: the Environmental Kuznets Curve
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Neoclassical Growth, Environment and Technological Change: the Environmental Kuznets Curve

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  • Santiago J. Rubio
  • José L. García
  • José L. Hueso

Abstract

This paper investigates socially optimal patterns of economic growth and environmental quality in a neoclassical growth model with endogenous technological progress. In the model, environmental quality has a positive effect not only on utility but also on production. Moreover, cleaner technologies can be used in the economy if a part of the output is used in environmentally oriented R&D. In this framework, if the initial level of capital is low, then the shadow price of a cleaner technology is low in relation to the cost of developing it, given by the marginal utility of consumption, and it is not worth investing in R&D. Thus, there will be a first stage of growth based only on the accumulation of capital with environmental quality decreasing until there is enough pollution to make investing in R&D profitable. After this turning point, if the new technologies are efficient enough, the economy can evolve along a balanced growth path with increasing environmental quality. The result is that the optimal investment pattern supports an environmental Kuznets curve.

Suggested Citation

  • Santiago J. Rubio & José L. García & José L. Hueso, 2009. "Neoclassical Growth, Environment and Technological Change: the Environmental Kuznets Curve," The Energy Journal, , vol. 30(2_suppl), pages 143-168, December.
    • Handle: RePEc:sae:enejou:v:30:y:2009:i:2_suppl:p:143-168
    DOI: 10.5547/ISSN0195-6574-EJ-Vol30-NoSI2-7
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    Cited by:

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    2. Lokonon Boris Odilon Kounagbè & Adeleke Oluwole Salami, 2017. "Working Paper 269 - Climate Change and Renewable Energy Generation in Africa," Working Paper Series 2386, African Development Bank.
    3. Wei Jin & ZhongXiang Zhang, 2014. "From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy," Working Papers 2014.100, Fondazione Eni Enrico Mattei.
    4. Carlo Orecchia & Maria Elisabetta Tessitore, 2011. "Economic Growth and the Environment with Clean and Dirty Consumption," Working Papers 2011.57, Fondazione Eni Enrico Mattei.
    5. Abdulla, Eman & Lim, King Yoong & Morris, Diego & Saliba, Faten, 2022. "Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence," The Warwick Economics Research Paper Series (TWERPS) 1429, University of Warwick, Department of Economics.
    6. Jin, Wei & Zhang, ZhongXiang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation," Working Papers 249494, Australian National University, Centre for Climate Economics & Policy.
    7. Wei Jin & ZhongXiang Zhang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation in China's Economic Growth," CCEP Working Papers 1412, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    8. Jin, Wei & Shi, Xunpeng & Zhang, Lin, 2021. "Energy transition without dirty capital stranding," Energy Economics, Elsevier, vol. 102(C).
    9. Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.
    10. Jaime Alonso-Carrera & Carlos Miguel & Baltasar Manzano, 2019. "Economic Growth and Environmental Degradation When Preferences are Non-homothetic," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1011-1036, November.
    11. Lim, King Yoong, 2024. "Heterogeneous environmental consciousness, carbon permit adoption, and endogenous growth: A case of China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 734-751.

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    More about this item

    Keywords

    Neoclassical Growth Model; Endogenous Technological Progress; External Effects; Environmental Kuznets Curve;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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