Modeling pollution and economic growth: the effect of a lethal threshold

Asuka Oura, Yasukatsu Moridera () and Koichi Futagami
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Yasukatsu Moridera: Graduate School of Economics, Osaka University

No 15-06, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: The accumulation of pollution negatively impacts human health. Extreme increases in pollution, in particular, may have lethal implications for human beings|and, indeed, all living organisms. This paper thus devises a new model of economic growth that takes into account these lethal effects of accumulated pollution via a pollution threshold to show two key results. First, if an abatement technology is relatively inefficient, there exists a stationary steady state in which consumption and pollution stop growing. Second, if the abatement technology is sufficiently efficient, there exists a path along which pollution decreases at an accelerating rate until finally reaching zero. In this case, consumption grows at a constant rate.

Keywords: Endogenous growth; Pollution disutility; Pollution abatement (search for similar items in EconPapers)
JEL-codes: O44 Q52 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2015-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-gro and nep-res
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