American Economic Review: Vol. 102 No. 1 (February 2012)
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The Environment and Directed Technical Change
Article Citation
Acemoglu, Daron,
Philippe Aghion,
Leonardo Bursztyn, and
David Hemous. 2012. "The Environment and Directed Technical Change."
American Economic Review,
102(1): 131-66.
DOI: 10.1257/aer.102.1.131
DOI: 10.1257/aer.102.1.131
Abstract
This paper introduces endogenous and directed technical change in a growth model with environmental constraints. The final good is produced from "dirty" and "clean" inputs. We show that: (i) when inputs are sufficiently substitutable, sustainable growth can be achieved with temporary taxes/subsidies that redirect innovation toward clean inputs; (ii) optimal policy involves both "carbon taxes" and research subsidies, avoiding excessive use of carbon taxes; (iii) delay in intervention is costly, as it later necessitates a longer transition phase with slow growth; and (iv) use of an exhaustible resource in dirty input
production helps the switch to clean innovation under laissez-faire. (JEL O33, O44, Q30, Q54, Q56, Q58)
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Authors
Acemoglu, Daron (MIT and Canadian Institute for Advanced Research)
Aghion, Philippe (Harvard U and Stockholm U)
Bursztyn, Leonardo (UCLA)
Hemous, David (Harvard U)
Aghion, Philippe (Harvard U and Stockholm U)
Bursztyn, Leonardo (UCLA)
Hemous, David (Harvard U)
JEL Classifications
O33: Technological Change: Choices and Consequences; Diffusion Processes
O44: Environment and Growth
Q30: Nonrenewable Resources and Conservation: General
Q54: Climate; Natural Disasters; Global Warming
Q56: Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Q58: Environmental Economics: Government Policy
O44: Environment and Growth
Q30: Nonrenewable Resources and Conservation: General
Q54: Climate; Natural Disasters; Global Warming
Q56: Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
Q58: Environmental Economics: Government Policy