Essays on environmental economics and growth

• Main Author: Leitão, Alexandra Paula Branco Pinto
• Publication Date: 2006
• Language: eng
• Source: Repositórios Científicos de Acesso Aberto de Portugal (RCAAP)
• Download full: http://hdl.handle.net/10362/151312
• topic: Domínio/Área Científica: Ciências Sociais: Economia e Gestão

This dissertation is composed of three papers in environmental economics and growth. The first two study environmental policies in a two -sector endogenous growth model, with preferences for environmental quality. In both cases it is assumed that governments have only social welfare considerations in mind. However, evidence suggests that corruption and lobbying are important sources of environmental degradation in developing countries. The third paper is an empirical essay about corruption and its implications in the control for environmental quality. The first paper of this dissertation examines environmental policy in the context of a two -sector small open -economy endogenous growth model, where an infinitely -lived representative agent, who cares about the environment, accumulates traded and nontraded capital, which are used to produce two goods. It is assumed that one of the sectors generates pollution as a byproduct of production. The competitive equilibrium of the small open economy with and without international lending and borrowing is studied. As expected, it is shown that the dynamic behavior of the equilibrium path depends heavily upon relative sectoral factor intensity conditions. The impact of environmental policy on prices and growth is examined. It is shown that the optimal environmental policy, in particular, the optimal pollution tax, depends on the possibility of lending and borrowing in international markets and on the preferences with respect to environmental quality. The second paper develops a two -sector endogenous growth model with environmental quality, where innovation and its direction are endogenous, with two goods and factors, one clean and one dirty. The internalization of the pollution externality is achieved by changing the direction of technical change. The decentralized equilibrium growth rate can be either below or above the optimal one. Distortions caused by the monopoly power and the R&D activity tend to decrease the decentralized equilibrium growth rate relative to the optimal one, while the environmental externality works in the opposite direction. Both first -best and second-best policies are studied. Finally, the last paper investigates how corruption alters the relationship between sulfur emissions and income, using a wide cross -national panel of countries, at different levels of development and with different degrees of corruption. The results support the Environmental Kuznets Curve hypothesis for sulfur. There is evidence that the higher the country's degree of corruption, the higher the per capita income at the turning point, suggesting different income -pollution paths across countries due to corruption. The specification used builds upon a new specification for the EKC developed by Bradford, Fender, Shore and Wagner that avoids using nonlinear transformations of potentially nonstationary regressors in panel estimation.