A Circular Economy Model of Sustainable Growth

Jhy -Yuan Shieh (), Brian Chi-ang Lin () and Jhy-Hwa Chen ()
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Jhy -Yuan Shieh: Soochow University
Brian Chi-ang Lin: National Chengchi University
Jhy-Hwa Chen: Tamkang University

Circular Economy and Sustainability, 2025, vol. 5, issue 4, 2679-2701

Abstract: Abstract A circular economy is in essence a closed system in which all goods produced have become inputs to sustain the system in the long run. By taking some of the key principles of a circular economy such as reducing waste and pollution, increasing recycling, and improving the natural environment into consideration, this paper provides a general equilibrium analysis of a circular economy model (CEM) in which the recycling of output waste is endogenously determined. When a unique steady-state balanced-growth path exists in a circular economy, consumption, the waste stock, and the pollution stock all grow at the same rate. Theoretically, this paper also shows that the government can implement a negative income tax and a positive pollution tax to optimally allocate all resources in a market economy and sustain long-term economic growth.

Keywords: Sustainable growth; Circular economy; Recycling; Economic growth; Sustainability (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43615-025-00559-7

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