Economic Growth and Greenhouse Gas Mitigation at the Environmental Limit

Michael Burda and Leopold Zessner-Spitzenberg

No 21973, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: An environmental limit changes the nature of economic growth, but does not preclude it. When atmospheric greenhouse gas levels reach a critical threshold, further economic growth requires a permanently expanding and resource-intensive mitigation effort. If too slow, technical progress in mitigation becomes a constraint and the ultimate determinant of economic growth. Secularly expanding GDP remains a durable feature of this class of economies, however, and characterizes the social planner’s optimum. Our findings are robust to the introduction of directed technical change.

Keywords: environmental limit; Baumol's cost disease; anthopogenic climate change; Mitigation; Ramsey policy; Directed technical change (search for similar items in EconPapers)
JEL-codes: O44 Q01 Q54 (search for similar items in EconPapers)
Date: 2026-09
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