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Endogenous growth and recycling: a material balance approach

Karen Pittel, Jean-Pierre Amigues () and Thomas Kuhn ()
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Thomas Kuhn: Department of Economics, Chemnitz University of Technology, Germany

No 05/37, CER-ETH Economics working paper series from CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich

Abstract: In this paper we analyze the importance of recycling in the strive for sustainable development. In contrast to former approaches we emphasize the role of the waste stock as a source of valuable inputs. We enhance a Romer (1990) type endogenous growth model by a material balance condition that re°ects the circulation of matter in the economy. Di®erentiated intermediate products are produced from recycled waste and virgin resources. These material intermediates are then employed in the production of ¯nal output. They either end up as waste after consumption or are bound in the capital stock { depending on the utilization of the produced output. We show that, even in the absence of environmental policy, long-run development is sustainable in this economy. The intuition is, that, as waste is a valuable resource in our model, not recycling part of it, cannot be optimal in the long-run.

Keywords: non-renewable resources; recycling; endogenous growth; sustainable development (search for similar items in EconPapers)
JEL-codes: O41 Q01 Q3 Q53 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2005-02
New Economics Papers: this item is included in nep-env
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