The Green Solow Model

William Brock and M. Scott Taylor

No 10557, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We demonstrate that a key empirical finding in environmental economics - The Environmental Kuznets Curve - and the core model of modern macroeconomics - the Solow model - are intimately related. Once we amend the Solow model to incorporate technological progress in abatement, the EKC is a necessary by product of convergence to a sustainable growth path. Our amended model, which we dub the Green Solow', generates an EKC relationship between both the flow of pollution emissions and income per capita, and the stock of environmental quality and income per capita. The resulting EKC may be humped shaped or strictly declining. We explain why current methods for estimating an EKC are likely to fail whenever they fail to account for cross-country heterogeneity in either initial conditions or deep parameters. We then develop an alternative empirical method closely related to tests of income convergence employed in the macro literature. Preliminary tests of the model's predictions are investigated using data from OECD countries.

JEL-codes: E1 O1 (search for similar items in EconPapers)
Date: 2004-06
New Economics Papers: this item is included in nep-dev
Note: EFG EEE
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Citations: View citations in EconPapers (84)

Published as William Brock & M. Taylor, 2010. "The Green Solow model," Journal of Economic Growth, Springer, vol. 15(2), pages 127-153, June.

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Journal Article: The Green Solow model (2010)
Working Paper: The Green Solow model (2004)
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