Arbeitspapier

The Growth-Environment Trade-off: Horizontal vs Vertical Innovations

This paper explores the trade-off between economic growth and environmental quality along two paradigms of endogenous growth theory: variety expansion (HIP) and quality improvements (VIP). We compare the policies that match the decentralised economies' paths with the optimal "strong sustainable" growth path, characterised by growth in consumption and improvements in environmental quality. Three policy tools are employed: subsidies to monopolists and R&D, and taxes on emissions. The latter is increasing at the optimum, to keep the weight of tax revenues over output constant. All policy tools equal, the growth rate is higher in the VIP than in the HIP. The optimal subsidy to R&D is therefore greater and the cumulative loss in output smaller under HIP than the VIP.

Language
Englisch

Bibliographic citation
Series: Nota di Lavoro ; No. 34.1999

Classification
Wirtschaft
One, Two, and Multisector Growth Models
Renewable Resources and Conservation: General
Subject
Pollution
Endogenous Growth
Sustainable Development
Neue Wachstumstheorie
Nachhaltige Entwicklung
Innovation
Gleichgewichtiges Wachstum
Umweltpolitik
Theorie

Event
Geistige Schöpfung
(who)
Grimaud, André
Ricci, Francesco
Event
Veröffentlichung
(who)
Fondazione Eni Enrico Mattei (FEEM)
(where)
Milano
(when)
1999

Handle
Last update
20.09.2024, 8:21 AM CEST

Data provider

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Object type

  • Arbeitspapier

Associated

  • Grimaud, André
  • Ricci, Francesco
  • Fondazione Eni Enrico Mattei (FEEM)

Time of origin

  • 1999

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