Sustainable economic development and the environment

Luisito Bertinelli, Eric Strobl () and Benteng Zou

No 369, Center for Mathematical Economics Working Papers from Center for Mathematical Economics, Bielefeld University

Abstract: The relationship between growth and pollution is studied through a vintage capital model, where new technology is more environmentally friendly. We find that once the optimal scrapping age of technologies is reached, an economy may achieve two possible cases of sustainable development, one in which pollution falls and another in which it stabilizes, or a catastrophic outcome, where environmental quality reaches its lower bound. The outcome will depend on countries' investment path and their propensity to innovate in environmentally clean technologies, both of which are likely to differ across economies. Empirical results using long time series for a number of developed and developing countries indeed confirm heterogeneous experiences in the pollution-output relationship.

Keywords: Sustainable economic development; Environmental quality; EKC (Environmental Kuznets Curve); Vintage capital model (search for similar items in EconPapers)
Date: 2011-08-12
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Citations: View citations in EconPapers (3)

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