Pollution externalities, endogenous health and the speed of convergence in an endogenous growth model

Torben Klarl

Journal of Macroeconomics, 2016, vol. 50, issue C, 98-113

Abstract: Based on a dynamic general equilibrium model, we study the important link between pollution, health and growth during transition which has not received much attention in the existing theoretical literature on (semi-) endogenous growth. The focus of this paper is on the transitional dynamics behavior, with an emphasis both, on the asymptotic as well as on the average speed of convergence. We calibrate the model for a typical OECD country. On the basis of dynamic welfare calculations, which consider transitional dynamics effects, we show that welfare differences are most pronounced for an economy, which values health relatively highly and where the environmental tax change is more than just marginal. Hence, if an economy moves towards a more sustainable society, the policy maker should take into consideration transitional dynamic effects.

Keywords: Endogenous growth; Convergence speed; Health; Pollution (search for similar items in EconPapers)
JEL-codes: E03 E2 H3 I10 Q51 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:50:y:2016:i:c:p:98-113

DOI: 10.1016/j.jmacro.2016.09.003

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