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ENVIRONMENTAL POLICY, EDUCATION AND GROWTH: A REAPPRAISAL WHEN LIFETIME IS FINITE

Published online by Cambridge University Press:  05 December 2011

Xavier Pautrel
Xavier Pautrel*
Affiliation:
University of Nantes (LEMNA)
*
Address correspondence to: Xavier Pautrel, LEMNA, Chemin de la Censive du Tertre, B.P. 52231, Nantes Cedex 3, France; e-mail: [email protected].
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Abstract

When finite lifetime is introduced in a Lucas [Journal of Monetary Economics 22 (1988), 3–42] growth model where the source of pollution is physical capital, the environmental policy may enhance the growth rate of a market economy, whereas pollution does not influence educational activities, labor supply is not elastic, and human capital does not enter the utility function. The result arises from the generational turnover effect due to finite lifetime and it remains valid under conditions when the education sector uses final output as well as time to accumulate human capital. This article also demonstrates that ageing reduces the positive influence of environmental policy when growth is driven by human capital accumulation à la Lucas in the overlapping-generations model of Yaari [Review of Economic Studies 32 (1965), 137–150] and Blanchard [Journal of Political Economy 93 (1985), 223–247].

Keywords

GrowthEnvironmentOverlapping GenerationsHuman Capital
Type
Articles
Information
Macroeconomic Dynamics , Volume 16 , Issue 5 , November 2012 , pp. 661 - 685
Copyright
Copyright © Cambridge University Press 2011

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