Technical Report Modeling pollution and economic growth: the effect of a lethal threshold

Oura, Asuka  ,  Moridera, Yasukatsu  ,  Futagami, Koichi

15-06pp.1 - 19 , 2015-04 , Graduate School of Economics and Osaka School of International Public Policy (OSIPP) Osaka University
Description
The accumulation of pollution negatively impacts human health. Extreme increases in pollution, in particular, may have lethal implications for human beings-and, indeed, all living organisms. This paper thus devises a new model of economic growth that takes into account these lethal effects of accumulated pollution via a pollution threshold to show two key results. First, if an abatement technology is relatively inefficient, there exists a stationary steady state in which consumption and pollution stop growing. Second, if the abatement technology is sufficiently efficient, there exists a path along which pollution decreases at an accelerating rate until finally reaching zero. In this case, consumption grows at a constant rate.

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