Environmental Policy and Directed Technical Change in a Global Economy: The Dynamic Impact of Unilateral Environmental Policies

Hémous, David
Authors registered in the RePEc Author Service: David Hemous

No 9733, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper builds a two-country (North, South), two-sector (polluting, nonpolluting) trade model with directed technical change, examining whether unilateral environmental policies can ensure sustainable growth. The polluting good is produced with a clean and a dirty input. I show that a temporary Northern policy combining clean research subsidies and a trade tax can ensure sustainable growth but Northern carbon taxes alone cannot. Trade and directed technical change accelerate environmental degradation either under laissez-faire or if the North implements carbon taxes, yet both help reduce environmental degradation under the appropriate unilateral policy. I characterize the optimal unilateral policy analytically and numerically using calibrated simulations.

Keywords: Climate change; Directed technical change; Environment; Innovation; Trade; Unilateral policy (search for similar items in EconPapers)
JEL-codes: F18 F42 F43 O32 O33 O41 Q54 Q55 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-ene, nep-env, nep-ino, nep-int and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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