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Neoclassical Growth, Environment and Technological Change: The Environmental Kuznets Curve

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  • Santiago J. Rubio, Jose L. Garcia and Jose L. Hueso
Abstract
The paper investigates socially optimal patterns of economic growth and environmental quality in a neoclassical growth model with endogenous technological progress. In the model, the environmental quality affects positively not only to utility but also to production. However, cleaner technologies can be used in the economy whether a part of the output is used in environmentally oriented R&D. In this framework, if the initial level of capital is low then the shadow price of a cleaner technology is low relative to the cost of developing it given by the marginal utility of consumption and it is not worth investing in R&D. Thus, there will be a first stage of growth based only on the accumulation of capital with a decreasing environmental quality until the moment that pollution is great enough to make profitable the investment in R&D. After this turning point, if the new technologies are efficient enough, the economy can evolve along a balanced growth path with an increasing environmental quality. The result is that the optimal investment pattern supports an environmental Kuznets curve.
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Suggested Citation

  • Santiago J. Rubio, Jose L. Garcia and Jose L. Hueso, 2009. "Neoclassical Growth, Environment and Technological Change: The Environmental Kuznets Curve," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    • Handle: RePEc:aen:journl:2009se-climate-change-a07
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    Cited by:

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    2. Lokonon Boris Odilon Kounagbè & Adeleke Oluwole Salami, 2017. "Working Paper 269 - Climate Change and Renewable Energy Generation in Africa," Working Paper Series 2386, African Development Bank.
    3. Wei Jin & ZhongXiang Zhang, 2014. "From Energy-intensive to Innovation-led Growth: On the Transition Dynamics of China’s Economy," Working Papers 2014.100, Fondazione Eni Enrico Mattei.
    4. Carlo Orecchia & Maria Elisabetta Tessitore, 2011. "Economic Growth and the Environment with Clean and Dirty Consumption," Working Papers 2011.57, Fondazione Eni Enrico Mattei.
    5. Abdulla, Eman & Lim, King Yoong & Morris, Diego & Saliba, Faten, 2022. "Climate Change, Gender Equality, and Firm-Level Innovation : Cross-Country Evidence," The Warwick Economics Research Paper Series (TWERPS) 1429, University of Warwick, Department of Economics.
    6. Jin, Wei & Zhang, ZhongXiang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation," Working Papers 249494, Australian National University, Centre for Climate Economics & Policy.
    7. Wei Jin & ZhongXiang Zhang, 2014. "Quo Vadis? Energy Consumption and Technological Innovation in China's Economic Growth," CCEP Working Papers 1412, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    8. Jin, Wei & Shi, Xunpeng & Zhang, Lin, 2021. "Energy transition without dirty capital stranding," Energy Economics, Elsevier, vol. 102(C).
    9. Maxime Menuet & Alexandru Minea & Patrick Villieu & Anastasios Xepapadeas, 2020. "Economic Growth and the Environment: A Theoretical Reappraisal," DEOS Working Papers 2031, Athens University of Economics and Business.
    10. Jaime Alonso-Carrera & Carlos Miguel & Baltasar Manzano, 2019. "Economic Growth and Environmental Degradation When Preferences are Non-homothetic," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1011-1036, November.
    11. Lim, King Yoong, 2024. "Heterogeneous environmental consciousness, carbon permit adoption, and endogenous growth: A case of China," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 734-751.

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