Sustainable growth under pollution quotas: optimal R&D, investment and replacement policies
Raouf Boucekkine,
Natali Hritonenko () and
Yuri Yatsenko
Additional contact information
Natali Hritonenko: Prairie View - Texas A&M University System
Working Papers from HAL
Abstract:
We consider an optimal growth model of an economy facing an exogenous pollution quota. In the absence of an international market of pollution permits, the economy has three instruments to reach sustainable growth: R&D to develop cleaner technologies, investment in new clean capital goods, and scrapping of the old dirty capital. The R&D technology depends negatively on a complexity component and positively on investment in this sector at constant elasticity. First, we characterize possible balanced growth paths for different parameterizations of the R&D technology. It is shown that countries with an under-performing R&D sector would need an increasing pollution quota over time to ensure balanced growth while countries with a highly efficient R&D sector would supply part of their assigned pollution permits in an international market without harming their long-term growth. Second, we study transitional dynamics to balanced growth. We prove that regardless of how large the regulation quota is, the transition dynamics leads to the balanced growth with binding quota in a finite time. In particular, we discover two optimal transition regimes: an intensive growth (sustained investment in new capital and R&D with scrapping the oldest capital goods), and an extensive growth (sustained investment in new capital and R&D without scrapping the oldest capital).
Keywords: Sustainable growth; vintage capital; endogenous growth; R&D; pollution quotas (search for similar items in EconPapers)
Date: 2011-10-17
New Economics Papers: this item is included in nep-dge, nep-ene, nep-env, nep-fdg, nep-ino and nep-reg
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00632887
References: View references in EconPapers View complete reference list from CitEc
Citations:
Downloads: (external link)
https://shs.hal.science/halshs-00632887/document (application/pdf)
Related works:
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:hal:wpaper:halshs-00632887
Access Statistics for this paper
More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().