 Directed technical change and economic growth effects of environmental policyPeter K. Kruse-Andersen Energy Economics, 2025, vol. 147, issue C Abstract: A Schumpeterian growth model is developed to investigate how environmental policy affects economic growth, when environmental policy also affects the direction of technical change. The model is designed to match several stylized facts to ensure its empirical relevance. It is shown analytically that a tightening of the environmental policy directs research efforts toward pollution abatement technologies and away from production technologies. Hence, economic growth is reduced unambiguously. However, the effect is highly non-linear. At first, a tighter environmental policy has a small impact on economic growth. Yet, the growth effects become substantial if the environmental policy is tightened sufficiently. Nonetheless, the economic growth rate is barely affected by a realistic tightening of the environmental policy. These model predictions are consistent with empirical observations for the OECD. Keywords: Directed technical change; Endogenous growth; Pollution; Environmental policy; Schumpeterian growth model (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:147:y:2025:i:c:s0140988325003366 DOI: 10.1016/j.eneco.2025.108512 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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