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Title: Pollution Abatement as a Source of Stabilisation and Long-Run Growth
Authors: Varvarigos, Dimitrios
Palivos, T.
First Published: 17-Feb-2016
Publisher: Cambridge University Press (CUP)
Citation: Macroeconomic Dynamics, 2016
Abstract: In a two-period overlapping generations model with production, we consider the damaging impact of environmental degradation on health and, consequently, life expectancy. Despite the presence of social constant returns with respect to capital, which would otherwise generate unbounded growth, when pollution is left unabated, the economy cannot achieve such a path. Instead, it converges either to a stationary level of capital per worker or to a cycle in which capital per worker oscillates permanently. The government’s involvement in environmental preservation proves crucial for both short-term dynamics and long-term prospects of the economy. Particularly, an active policy of pollution abatement emerges as an important engine of long-run economic growth. Furthermore, by eliminating the occurrence of limit cycles, pollution abatement is also a powerful source of stabilisation.
DOI Link: 10.1017/S1365100515000632
ISSN: 1365-1005
eISSN: 1469-8056
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Copyright © 2015, Cambridge University Press. All rights reserved. Deposited on acceptance of publication with reference to the publisher’s open access archiving policy, available at
Appears in Collections:Published Articles, Dept. of Economics

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