On the impossibility of sustainable growth in a manufacturing based economy
Journal Title: Economic Research-Ekonomska Istraživanja - Year 2018, Vol 31, Issue 1
Abstract
This paper investigates a possibility of sustainable growth in a multi-output endogenous growth framework where the capital accumulation takes place mainly through the production of the dirty manufactured goods. It is shown that in a closed economy, economic growth is not environmentally sustainable, even under an optimal pollution tax unless the consumption elasticity of substitution between clean and dirty goods approaches infinity as in a small open economy which exports dirty goods. There exists a minimal threshold level of the ratio of clean to dirty capital that ensures sustainable growth in a closed economy.
Authors and Affiliations
Sang Won Yoon, Chang-Ho Yoon
Keywords
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- EP ID EP543480
- DOI 10.1080/1331677X.2018.1498008
- Views 37
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