Environmental quality and pollution-augmenting technological change in a two-sector endogenous growth model Bovenberg, A.L.; Smulders, J.A.

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To examíne the question whether sustained growth and environmental quality are compatible, a macroeconomic model is developed where the environment is essential for production and welfare and where the growth rate is an endogenously detemvned variable. Pollution is an inevitable side-product of economic activity. It can be reduced by spending a fraction of total output on abatement activities. It is examined first under what conditions sustainable growth is feasible and when this is optimal. The influence of increased environmental care on the growth rate is traced. Increased environmental care affects long-term output growth through three channels: crowding out of investment, pruductivity improvements, and intertemporal substitution of consumption. Externalities arise because the economy-wide leve! of pollution affects negatively the productivity of produccion factors and welfaze.' We are indebted to Athur van Scest for helpful comments on Appendiz A, and to L. Bovenberg, Th. van de Klundert and two anonymous referees for useful comments on an earlier draft. The views expressed in this paper are our own and do not necessazily retlect those of the Ministry of Finance." Correspondence to: 1. Smulders,

We present a model of growth driven by energy use and endogenous factoraugmenting technological change. Both the rate and direction of technological progress are endogenous. The model captures four main stylized facts: total energy use has increased; energy use per hour worked increased slightly; energy efficiency has improved; and the value share of energy in GDP has steadily fallen. We study how energy conservation policies affect growth over time and the long run. Policies that reduce the level of energy use are distinguished from those that reduce the growth rate of energy inputs. Although these policies may stimulate innovation, they unambiguously depress output levels. The former policy has no impact on long-run growth; the latter reduces long-run growth both in the short run and in the long run.JEL codes: O41, Q43

We present an endogenous growth model in which the scale effect may be positive or negative, but vanishes asymptotically. The mechanism behind this result provides a microfoundation for models that exploit the interaction of growth and market structure to remove the scale effect. When more firms are active, the economy is more specialised in that firms are less likely to work on related problems. This increase in technological distance reduces the spillovers between firms. A larger economy with more firms accumulates more knowledge. However, the spillovers that benefit a firm do not necessarily increase because of the differentiation of the knowledge stock.One of the puzzles in the theory and empirics of endogenous technological change is the scale effect. Specifically, models in which growth is driven by the accumulation of non-rival knowledge predict that larger economies (measured by a larger labour force) grow faster because (a) they have more resources to devote to knowledge creation and (b) the larger scale to which knowledge can be applied raises the returns to innovation.This prediction is difficult to reconcile with empirical evidence. In their study of the cross-sectional evidence Backus et al. (1992) find that GDP growth is not related to the scale of the economy, although TFP growth in manufacturing is positively related to the scale of the manufacturing sector. In his study of the time-series evidence, Jones (1995) finds that the behaviour of TFP growth and R&D investment in the manufacturing sectors of OECD countries is inconsistent with the scale effect.We present an endogenous growth model where the scale effect may be positive or negative but always vanishes asymptotically. What distinguishes our paper from several others, discussed below, is that we provide a microfoundation for a general class of models that exploit the interaction of growth and market structure to remove the scale effect. Moreover, our model is consistent with microeconomic evidence on R&D processes and knowledge spillovers within firms and industries and the role of market structure in shaping these processes.The new feature of our framework is that we model knowledge accumulation and spillovers as two-dimensional: not only does research and development lead to improved understanding of existing problems (intensive margin), but it often implies original formulation of new problems, and new lines of research (extensive margin). Accumulation of knowledge along the intensive margin expands the public knowledge stock and gives rise to spillovers, as emphasised in the standard

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In this paper we develop a formal model of economic growth and two types of social capital. Following extant literature, we model social capital as participation in two types of social networks: first, closed networks of family and friends, and, second, open networks that bridge different communities. Higher levels of social capital may crowd out economic growth through a reduction of working time. At the same time, participation in intercommunity networks reduces incentives for rent seeking and cheating, promoting economic growth. We test our hypotheses in a sample of European regions using unique data from the European Value Studies (EVS). Our findings show that it is important to distinguish between the nature of the social interaction. Bonding and bridging social capital and economic growth AbstractIn this paper we develop a formal model of economic growth and two types of social capital. Following extant literature, we model social capital as participation in two types of social networks: first, closed networks of family and friends, and, second, open networks that bridge different communities. Higher levels of social capital may crowd out economic growth through a reduction of working time. At the same time, participation in intercommunity networks reduces incentives for rent seeking and cheating, promoting economic growth. We test our hypotheses in a sample of European regions using unique data from the European Value Studies (EVS). Our findings show that it is important to distinguish between the nature of the social interaction.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The opinions expressed in this paper do not necessarily reflect the position of Fondazione Eni Enrico Mattei Terms of use: Documents in Sustainability and Substitution of Exhaustible Natural Resources How resource prices affect long-term R&D investments SummaryTraditional resource economics has been criticised for assuming too high elasticities of substitution, not observing material balance principles and relying too much on planner solutions to obtain long-term growth. By analysing a multisector R&D-based endogenous growth model with exhaustible natural resources, labour, knowledge, and physical capital as inputs, the present paper addresses this critique. We study transitional dynamics and the long-term growth path and identify conditions under which firms keep spending on research and development. We demonstrate that long-run growth can be sustained under free market conditions even when elasticities of substitution between capital and resources are low and the supply of physical capital is limited, which seems to be crucial for today's sustainability debate.