Natural Disasters in a Two-Sector Model of Endogenous Growth

Ryo Horii and Masako Ikefuji

Working Papers from Economic Growth Center, Yale University

Abstract: This paper studies sustainability of economic growth considering the risk of natural disasters caused by pollution in an endogenous growth model with physical and human capital accumulation. It is shown that economic growth is sustainable only if the tax rate on the polluting input is increased over time and that the long-term rate of economic growth follows an inverted V-shaped curve relative to the growth rate of the environmental tax. The social welfare is maximized under a positive steady-state growth in which faster accumulation of human capital compensates the productivity loss due to declining use of the polluting input.

Keywords: human capital; global warming; environmental tax; endogenous depreciation; nonbalanced growth path (search for similar items in EconPapers)
JEL-codes: E22 H23 O13 O41 Q54 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2010-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.econ.yale.edu/growth_pdf/cdp992.pdf (application/pdf)

Related works:
Journal Article: Natural disasters in a two-sector model of endogenous growth (2012)
Working Paper: Natural disasters in a two-sector model of endogenous growth (2012)
Working Paper: Natural Disasters in a Two-Sector Model of Endogenous Growth (2010)
Working Paper: Natural Disasters in a Two-Sector Model of Endogenous Growth (2010)
Working Paper: Natural Disasters in a Two-Sector Model of Endogenous Growth (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:egc:wpaper:992

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