A simple endogenous growth model with endogenous fertility and environmental concern

Abstract

We analyze the implications of endogenous fertility choices on both economic and environmental performances in a stylized AK-type growth model. Differently from what traditionally assumed in the growth and environment literature, we allow pollution to be not only a by-product of productive activities by firms but also a result of households' behavior, as suggested by the celebrated IPAT equation. We show that along the balanced growth path equilibrium, economic growth may be non-monotonically related to the population growth rate as agents care for the environment; moreover, demographic policies can be used both to achieve win-win outcomes (simultaneously fostering economic growth and improving environmental quality) and to stabilize the otherwise non-monotonic economic and population growth relationship.

On the economic growth and environmental trade-off: a multi-objective analysis

“…Understanding the nature of such a mutual relation between economic growth and environmental outcomes has been the main focus of a large and growing economics literature (see Xepapadeas, 2003;and Brock and Taylor, 2005; for some recent surveys). Several papers either analyze the extent to which it is possible to reconcile economic growth and environmental preservation by pursuing specific win-win policies (Porter and van der Linde, 1995; Ansuategi and Marsiglio, 2017;Marsiglio;2017), or discuss how the nature of the economy-environment 1 relation is complicated further by the presence of uncertainty in environmental or economic dynamics (Soretz, 2007;Athanassoglou and Xepapadeas, 2012; La Torre et al, 2017) and transboundary externalities associated with pollution diffusion (Ansuategi and Perrings, 2000; La Torre et al, 2015; de Frutos and Martín-Herrann, 2018), or argue why the economic growth and environment relation is nonmonotonic and specifically U-shaped (John and Pecchenino, 1994;Stokey, 1998;.…”

“…We now apply Lemma 2 to show that the function V (k, p) defined in (19) is indeed the value function of problem (11). To establish Property 1 of the Lemma recall that there is a maximum capital level,k > 0, that can be sustained in the long run: as p t ≥ 0 for all t ≥ 0, from the first constraint in (4) such upper bound is easily obtained noting that…”

“…As the function V (k, p) defined in (19) is unbounded from below, before proving Proposition 1 we recall the following verification principle (Lemma 2) that holds for unbounded functions. Consider the general problem…”

“…Note that under (17) G 0 > 0 certainly holds. Similarly, the argument in the first log of the function V (k ′ t , p ′ t ) defined in (19) becomes…”

The optimal population size under pollution and migration externalities: a spatial control approach

“…Such a research question is generally addressed in an endogenous fertility framework aiming to understand how optimal fertility decisions are affected by specific (economic and environmental) factors. Several works analyze either the relation between endogenous fertility and economic growth [7,30,33,36] or the relation between endogenous fertility and natural resources [22,29,31,32,38]. To the best of our knowledge, none of the existing works takes into account migration flows which, by interacting with economic and environmental factors, are likely to play a major role in determining individuals' fertility decisions and population dynamics.…”