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Climate change and growth

Nicholas Stern and Joseph Stiglitz

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Contrary to much of the conventional wisdom, taking stronger actions on climate change may enhance economic growth, even as conventionally measured, but even more so, in terms of societal well-being. We identify the flaws in the models and analyses which contend that there must be a trade-off and explain the mechanisms and dynamic forces which have the potential to enhance growth. Critically, there are numerous market failures that result in suboptimal economic performance. We explain how addressing climate change reduces the bite of these failures and enhances the incentives and political will to address them. We identify packages of policies that alleviate market failures, enhance growth, and reduce carbon emissions. Finally, we argue that the green transition is coming at a time when, both because of persistent deficiencies of aggregate demand and advances in technology, including artificial intelligence and robotization, the macroeconomic opportunity costs of strong climate actions may be especially low and the benefits particularly high.

Keywords: UKRI; fund (search for similar items in EconPapers)
JEL-codes: O40 O49 Q58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2023-04-01
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env, nep-gro and nep-res
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in Industrial and Corporate Change, 1, April, 2023, 32(2), pp. 277 - 303. ISSN: 0960-6491

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