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Growth in an OLG Economy with Polluting Non-Renewable Resources

Abstract : This paper analyses the effects of flow pollution implied by the use of necessary non-renewable resources, fossil fuel for example, on overlapping generations (OLG) economies. Notably, it shows that, on the balanced growth path, flow pollution reduces the (negative) resources contribution to growth and increases resources conservation, capital accumulation, and growth. Flow pollution thus increases the ability of an economy to sustain a non-decreasing consumption path. Some of the results are due to (or magnified by) the OLG structure of the economy. In addition, the paper highlights the need for public intervention and shows that the optimal allocation may be decentralized using a tax on resources use and transfers.
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Submitted on : Friday, January 28, 2022 - 4:13:39 PM
Last modification on : Friday, April 1, 2022 - 3:57:46 AM
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Nicolas Clootens. Growth in an OLG Economy with Polluting Non-Renewable Resources. Annals of Economics and Statistics, CNGP-INSEE, 2021, pp.3. ⟨10.15609/annaeconstat2009.141.0003⟩. ⟨hal-03544065⟩

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