A Knife-Edge Property of Some Pollution-and-Growth Models

Abstract

In some recent economic growth models there can be decreasing pollution along with increasing per capita income, if the rate of improvement in the environmenta ltechnology is sufficiently high. A central function describes how gross pollution and environmental technology interact to determine net pollution, which in the previous works has a log-linear form. This letter provides an example in which this function is generalized to a CES type. The result is that the environmental technology factor in the long run may be either implausibly potent or almost ineffective in transforming a high gross pollution to a low net pollution if the function deviates from the log-linearcase