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ENVIRONMENTAL DYNAMICS AND THE LINKS BETWEEN GROWTH, VOLATILITY AND MORTALITY

Authors


  • I am grateful to two anonymous referees for useful comments and suggestions on an earlier draft. I would like to thank Paul Madden, Theodore Palivos, Gianni de Fraja, Miltos Makris and participants at the conference on Sustainable Resource Use and Economic Dynamics (Ascona) for useful comments and suggestions. I bear sole responsibility for any errors and/or omissions.

Correspondence: Department of Economics, Astley Clarke Building, University Road, Leicester LE1 7RH, UK. Tel: ++44 (0) 116 252 2184; Email: dv33@le.ac.uk.

ABSTRACT

I construct a model of a growing economy with pollution. The analysis of the model shows that the interactions between capital accumulation, endogenous lifetime and environmental quality determine both the long-run growth rate and the pattern of convergence (i.e., monotonic or cyclical) towards the balanced growth path. I argue that such interactions can provide a possible explanatory factor behind the, empirically observed, negative correlation between growth and volatility. Furthermore, the model may capture the observed pattern whereby economic growth and mortality rates appear to be negatively related in the long run, but positively related in the short run.

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