A Comment on Huang and Cai's Constant-Returns Endogenous Growth with Pollution Control

doi:10.1023/A:1012677914363

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Title:	A Comment on Huang and Cai's Constant-Returns Endogenous Growth with Pollution Control
Authors:	Shieh, Jhy-yuan;Lai, Ching-chong;Chen, Jhy-hwa
Contributors:	淡江大學經濟學系
Date:	2001-10
Issue Date:	2009-11-30 18:36:44 (UTC+8)
Publisher:	Springer
Abstract:	In an interesting paper published in Environmental and Resource Economics, Huang and Cai (1994) developed an AK type technology endogenous growth model to address the impact of the environment on economic growth and social welfare. In that paper the emission is treated as an inevitable by-product of productive activity and the stock of pollution is put into the agent’s utility function to capture the environment’s amenity value. However, the Huang and Cai (1994) conclusions may be modified, or at least accepted with considerable caution, since in their analysis the abatement expenditure share is inappropriately shown to be constant at all times. In this paper we attempt to re-examine what the true forces are that govern the balanced growth rate. The rest of the paper is organized as follows. Section 2 outlines the Huang and Cai (1994) model and shows that there exists a unique endogenously-determined steady-state economic growth rate and steady-state abatement expenditure share when the economy is characterized by a unique perfect-foresight equilibrium. Section 3 re-examines the comparative statics reported in Huang and Cai (1994). Specifically, we will address how the economic growth rate reacts following changes in environmental factors and public abatement expenditure. Finally, some concluding remarks are presented in section 4.
Relation:	Environmental and resource economics 20(2), pp.165-172
DOI:	10.1023/A:1012677914363
Appears in Collections:	[Graduate Institute & Department of International Business] Journal Article [Graduate Institute & Department of Economics] Journal Article

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