Optimal growth when environmental quality is a research asset

Christian Groth; Francesco  Ricci

doi:10.1016/j.rie.2011.01.005

Optimal growth when environmental quality is a research asset

Christian Groth, Francesco Ricci

Økonomisk Institut

2 Citationer (Scopus)

Abstract

We advance an original assumption whereby a good state of the environment positively affects labor productivity in R&D such that deteriorating environmental quality negatively impacts R&D. We study the implications of this assumption for the optimal solution in an R&D-based model of growth, where the use of a non-renewable resource generates pollution. We show that in such a case, it is socially optimal to postpone extraction, as opposed to the situation in which the environment has no effect on productivity in R&D. Furthermore, insofar as environmental quality declines and subsequently recovers, we find that it is optimal to re-allocate employment to R&D in line with productivity changes. If environmental quality recovers only partially from pollution, R&D effort optimally begins above its long-run level, then progressively declines to a minimum and eventually increases to its steady-state level.

Originalsprog	Engelsk
Tidsskrift	Research in Economics
Vol/bind	65
Udgave nummer	4
Sider (fra-til)	340-352
Antal sider	13
ISSN	1090-9443
DOI	https://doi.org/10.1016/j.rie.2011.01.005
Status	Udgivet - dec. 2011

Adgang til dokumentet

10.1016/j.rie.2011.01.005

http://www.econ.ku.dk/okocg/Forside%20mm/Publications.htm

Citationsformater

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AU - Ricci, Francesco

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