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The unilateral implementation of a sustainable growth path with directed technical change

Inge van den Bijgaart ()

European Economic Review, 2017, vol. 91, issue C, 305-327

Abstract: We determine the conditions under which unilateral policies can implement global sustainable growth in a dynamic two-country directed technical change framework. Domestic climate policies alter the structure of domestic and foreign production and thereby innovation incentives across countries. Implementing sustainable growth requires redirecting global innovation to the nonpolluting sector. If most innovation takes place in the foreign country, policies must redirect foreign innovation by relocating clean production to the foreign country. A calibration exercise suggests that the US or EU alone are too small to implement sustainable growth. A coalition of Annex I countries that ratified the Kyoto protocol can implement sustainable growth, yet required tax rates are very high.

Keywords: Unilateral environmental policy; Directed technical change; Trade (search for similar items in EconPapers)
JEL-codes: F18 O33 Q54 Q55 Q58 (search for similar items in EconPapers)
Date: 2017
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Working Paper: The Unilateral Implementation of a Sustainable Growth Path with Directed Technical Change (2015) Downloads
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