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A new endogenous growth model for green low-carbon behavior and its comprehensive effects

Bingyue Wan, Lixin Tian, Naiping Zhu, Liqin Gu and Guangyong Zhang

Applied Energy, 2018, vol. 230, issue C, 1332-1346

Abstract: This paper establishes a new endogenous growth model driven by green low-carbon behavior, optimizes the model and three systems with green low-carbon behavior in order to obtain the comprehensive effects of the empirical and policy of the three policies that have been set. This paper consists of three parts: green low-carbon behavior endogenous growth model, three green low-carbon behavior systems, empirical and policy effects. In the green low-carbon behavior endogenous growth model, we have built a new endogenous growth model, which is based on the existing endogenous growth model, considering the effects and influences of green low-carbon behavior. The model divides the economic system in green low-carbon behavior pattern into three modules: the production module, the household module and the R&D module. In the production module, we consider the number of knowledge diffusion in the intermediate goods and use the number of knowledge diffusion to explain the transmission of green low-carbon behavior. We consider environmental quality, capital, labor and emission input in the production function of the intermediate goods in a specific sector. Then we get the first-order conditions of intermediate producers based on the profit function of intermediate producers. In the household module, we consider consumption, environmental quality and carbon emissions in the representative household utility, and use Hamilton function in order to obtain the optimum conditions for the representative household with respect to consumption and physical capital. In the R&D module, we obtain the characteristics of the balanced growth path in a stable state. In the second part, we propose three green low-carbon behavior systems. Through the optimization of government budget, welfare function and the nine optimization solutions of the new model in green low-carbon behavior pattern, we compare the government’s green low-carbon behavior (GG), private green low-carbon behavior motivated by the government (PMG) and private green low-carbon behavior motivated by anarchy (PG). Finally, we draw the conclusion that PMG is an optimal system to achieve the highest growth rate and welfare level. In the part of empirical and policy effects, we propose three green low-carbon parameters that policymakers need to consider and then the numerical simulations are conducted based on data from the United States and China. Then we compare the results obtained from the two countries' numerical simulation, and get the comprehensive effects of green low-carbon behavior: growth welfare effect and knowledge diffusion effect.

Keywords: Green low carbon behavior; Endogenous growth model; Growth rate; Welfare level; Comprehensive effects (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:eee:appene:v:230:y:2018:i:c:p:1332-1346