Quantitative versus qualitative growth with recyclable resource

Germain, Marc; Fagnart, Jean-François

doi:10.1016/j.ecolecon.2010.11.008

Cited by 13 publications

(8 citation statements)

References 22 publications

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“…Note that we consider a pollution (via aggregate waste) negative externality while the macroeconomic literature of recycling and fluctuations does not (see for example De Beir et al, 2010). The same comparison holds with the ecological sustainability literature (see Fagnart and Germain, 2011).…”

Section: Modelmentioning

confidence: 59%

“…The recent macroeconomic literature contains studies of the impact of recycling on aggregate fluctuations (see De Beir et al, 2010, for example). There have also been several attempts to incorporate waste and recycling in a sustainability analysis, as we are doing in our paper, most often in decentralized equilibrium frameworks with technological progress (see for example, the recent paper by Fagnart and Germain, 2011).…”

Section: Introductionmentioning

confidence: 99%

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Optimal Growth with Polluting Waste and Recycling

Boucekkine

Ouardighi

2016

Dynamic Modeling and Econometrics in Economics and Finance

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Abstract.We study an optimal AK-like model of capital accumulation and growth in the presence of a negative environmental externality in the tradition of Stokey (1998). Both production and consumption activities generate polluting waste. The economy exerts a recycling effort to reduce the stock of waste. Recycling also generates income, which is fully devoted to capital accumulation. The whole problem amounts to choosing the optimal control paths for consumption and recycling to maximize a social welfare function that notably includes the waste stock and disutility from the recycling effort. We provide a mathematical analysis of both the asymptotic behavior of the optimal trajectories and the shape of transition dynamics. Numerical exercises are performed to illustrate the analysis and to highlight some of the economic implications of the model.

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Section: Modelmentioning

confidence: 59%

Section: Introductionmentioning

confidence: 99%

Optimal Growth with Polluting Waste and Recycling

Boucekkine

Ouardighi

2016

Dynamic Modeling and Econometrics in Economics and Finance

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“…We study the energy transition in a dynamic general equilibrium macroeconomic model consistent with ecological economics in the line of macroeconomic models like [32][33][34]. More precisely, we assume that (1) the possibility of substituting energy resources by man-made inputs is limited (e.g., [35]) and (2) technological progress is bounded by physical limits (e.g., [30]).…”

Section: Method: a Dynamic General Equilibrium Model Of Energy Transitionmentioning

confidence: 99%

“…In other words, as in a Ricardian resource model, increasing production requires operating less and less favorable sites. We also refer to [10][11][12][13] for other arguments in the case of intermittent RE sources and to [33] for a formal justification of the assumption of decreasing returns-to-scale in the use of a renewable resource in a macroeconomic model. Note that technologies (2) and (4) share a same property: the operating cost of energy production skyrockets when its level reaches the resource limits (i.e., respectively when E t → S t for NRE and when F t → F for RE).…”

Section: Renewable Energy Sectormentioning

confidence: 99%

Can the Energy Transition Be Smooth? A General Equilibrium Approach to the EROEI

2020

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The concept of energy return (EROEI ratio) is widely used in energy science to describe the interactions between energy and the economic system but it is largely ignored in macroeconomics. In order to contribute to bridging a gap between these fields of research, we incorporate these metrics into an endogenous growth model with two sectors (energy and final goods) and use this model to analyze the macroeconomic implications of a transition to lower EROEI resources. An approach in terms of net energy allows us (1) to explicitly link the EROEI to macroeconomic variables, (2) to show how it is related to the growth rate of GDP and (3) to obtain a closed-form solution for its long-run value at a general equilibrium level. There is furthermore a tight and decreasing long-run relationship between the EROEI value and the share of investment that must be allocated to the energy sector. Hence, a transition to lower EROEI resources intensifies the rival use of capital in the energy and non-energy sectors and leads to major economic changes, both in the inter-sectoral capital allocation and in the allocation of final output between consumption and investment. We show that a protracted economic contraction may occur before the completion of the transition to renewable energy. We analyze how (1) the magnitude of this contraction and (2) the possibility of an ulterior recovery depend on the initial stock of non-renewables, the potentials of technical progress in the energy and non-energy sectors and the substitutability between capital and energy.

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“…See e.g Fagnart and Germain [2011]. who rationalise this assumption in a growth model with renewable resource.17 This assumption of a decreasing elasticity is compatible with various functional forms for U (implying either an always concave function U or a function U first convex, next concave for sufficiently large values of h).…”

mentioning

confidence: 96%