Long-run Welfare under Externalities in Consumption, Leisure, and Production: A Case for Happy Degrowth vs. Unhappy Growth

Ennio Bilancini and Simone D’Alessandro ()
Authors registered in the RePEc Author Service: Simone D'Alessandro ()

Department of Economics from University of Modena and Reggio E., Faculty of Economics "Marco Biagi"

Abstract: In this paper we contribute to the debate on the relationship between growth and well-being by examining an endogenous growth model where we allow for externalities in consumption, leisure, and production. We analyze three regimes: a decentralized economy where each household makes isolated choices without considering their external e_ects, a planned economy where a myopic planner fails to recognize both leisure and consumption externalities but recognizes production externalities, and a planned economy with a fully informed planner. We _rst compare the balanced growth paths under the three regimes and then we numerically investigate the transition to the optimal bilance growth path. We provide a number of _ndings. First, in a decentralized economy growth or labor (or both) are greater than in the regime with a fully informed planner, and hence are sub-optimal from a welfare standpoint. Second, a myopic intervention which overlooks consumption and leisure externalities leads to more growth and labor than in both the decentralized and the fully informed regime. Third, we provide a case for happy degrowth: a transition to the optimal balanced growth path that is associated with downscaling of production, a reduction in private consumption, and an ongoing increase in leisure and well-being.

Keywords: degrowth; endogenous growth; consumption externalities; leisure externalities; production externalities (search for similar items in EconPapers)
JEL-codes: E62 H21 H23 Q13 (search for similar items in EconPapers)
Pages: pages 31
Date: 2011-10
New Economics Papers: this item is included in nep-dge and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.dep.unimore.it/materiali_discussione/0667.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.dep.unimore.it:80 (No such host is known. )

Related works:
Journal Article: Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth (2012)
Working Paper: Long-run Welfare under Externalities in Consumption, Leisure, and Production: A Case for Happy Degrowth vs. Unhappy Growth (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mod:depeco:0667

Access Statistics for this paper

More papers in Department of Economics from University of Modena and Reggio E., Faculty of Economics "Marco Biagi" Contact information at EDIRC.
Bibliographic data for series maintained by Sara Colombini ().