Sustainable Economic Growth: Structural Transformation with Consumption Flexibility

Ramon Lopez and Sang Won Yoon

No 142561, Working Papers from University of Maryland, Department of Agricultural and Resource Economics

Abstract: The standard theoretical literature has shown that environmental sustainability and positive economic growth are not incompatible as long as environmental policies are optimal. However, in showing this result earlier studies have relied on strong assumptions that may appear to charge the dice in favor of such result. Here we show that once the role of the consumption composition effect is recognized, environmentally sustainable economic growth may exist even if some of the most questionable assumptions used by the canonical models are relaxed. In particular, we show that sustainable growth is possible even if environmental and man-made factors of production are complement rather than highly substitutable as has been invariably assumed by the literature and even if technological change is entirely pollution-augmenting.

Keywords: Environmental Economics and Policy; International Development (search for similar items in EconPapers)
Pages: 37
Date: 2013-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-res
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Citations: View citations in EconPapers (1)

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Working Paper: Sustainable Economic Growth: Structural Transformation with Consumption Flexibility (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umdrwp:142561

DOI: 10.22004/ag.econ.142561

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