An overlapping generations model of growth and the environment

TR Number
Date
1994
Journal Title
Journal ISSN
Volume Title
Publisher
The Economic Journal
Abstract

This article analyses the potential conflict between economic growth and the maintenance of environmental quality in an overlapping generations model. Short-lived individuals make decisions which have long-lasting effects on both factor productivity and the environment. The model provides a theoretical explanation of observed correlations between environmental quality and income, whereby economic growth is associated first with declines, then improvements, in environmental quality. It suggests circumstances in which multiple Pareto-ranked steady-state equilibria may arise, and in which sustained growth of both capital and environmental quality may occur. Over-maintenance of the environment, analogous to dynamically inefficient over accumulation of capital, may emerge.

Description
Metadata only record
Keywords
Environmental services, Economic policy, Economic growth, Environmental impacts, Economic growth, Environmental quality, Income, Governance
Citation
The Economic Journal 104(427): 1393-1410.