The Environmental Kuznets Curve in a Public Spending Model of Economic Growth

Ibrahima Diallo

Journal of Economic Development, 2019, vol. 44, issue 4, 69-96

Abstract: This paper theoretically analyzes the dynamics of economic growth and the environmental Kuznets curve. This curve states an inverse U-relationship between pollution and income. The presented model specifically shows how a dynamic environmental Kuznets curve can emerge by introducing pollution and abatement technology in a public spending model of endogenous economic growth. We also derive the turning point in function of the parameters of the model. The numerical section demonstrates that when taxes are below some threshold, the turning point decreases with taxes but it increases when taxes are above the threshold point given some explanations about an N-shaped Kuznets curve. Additionally, the simulations demonstrate that taxes reduce the level of pollution by pulling down the environmental Kuznets curve. Lastly the numerical exercises highlight that the pollution level of the social planner problem is less than that of the representative agent.

Keywords: Abatement; Dynamic Optimization; Endogenous Growth Theory; Pollution; Environmental Kuznets Curve; Numerical Simulations; Public Spending; Turning Point; Taxes (search for similar items in EconPapers)
JEL-codes: C61 C63 H23 H41 H54 H61 O41 O44 (search for similar items in EconPapers)
Date: 2019
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Related works:
Working Paper: The environmental Kuznets curve in a public spending model of economic growth (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:44:y:2019:i:4:p:69-96

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