Structural Change, Economic Growth and the Environmental Kuznets Curve: A Theoretical Perspective
2003-09-08
Research Report
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The question of whether economic growth will ultimately resolve environmental problems has recently been discussed in a mainly empirical literature. One of the mechanisms that can explain the finding of an inverted U-shaped relationship between income and emissions relies on the changes in the sectoral composition of economies associated with economic growth. This paper develops a multi-sector general-equilibrium model to study the dynamic relationships between technological progress, economic development, the sectoral composition of economies and emissions. In the model, structural change is the outcome of a complex interplay between factors of demand and supply, and results from both differences in technological progress on a sectoral level and from differences in income elasticities of demand for different goods. We will derive under what conditions such changes can give rise to a hump-shaped relationship between per capita income and emissions.
- O10 : Economic Development: General
- O41 : One, Two, and Multisector Growth Models
- Q40 : Energy: General
- emission
- change
- labor
- sector
- model
- growth
- sectoral
- progress
- price
- development
- income
- production
- subsistence requirements
- energy
- demand
- productivity
- sectoral composition
- pollution
- requirement
- paper
