R&D, Growth, and Pollution Abatement


(with Jean-Pierre Amigues)

In this paper, we provide insights into the relationships between technological development, economic growth, and pollution accumulation, using a two-sector model of economic growth with endogenous technical change. In the model, output is produced using a polluting resource. Production can be used for either consumption or abatement of pollution. There are scientists who can be allocated between two research activities: resource-saving and abatement-augmenting technologies. We characterize the optimal steady-state and off-steady-state dynamics and show that a green growth path is always socially optimal. Optimal allocation of scientists, path dependence, and monotonicity properties of optimal trajectories are also analyzed.